Pardon me, if this quetion has been answered in previous mails.If I convert my current IRA to a ROTH IRA, would I be taxed on what I originally paid into the IRA or what the IRA is currently valued at? I, unfortunately, have lost money in the original value of my IRA.
[[Pardon me, if this quetion has been answered in previous mails. If I convert my current IRA to a ROTH IRA, would I be taxed on what I originally paid into the IRA or what the IRA is currently valued at? I, unfortunately, have lost money in the original value of my IRA.]]You'll pay tax on the value of the IRA on the conversion date. That amount will be determined based upon the type of contibutions that you have made to your IRA in the past. (deductible vs. non-deductible) For example, let's say that you made 3 prior deductible contributions of $2k each, for total contributions of $6k. But, because of losses, your IRA is now worth only $4k. When you do your conversion, you would be assessed tax on only $4k.But, if you have also made non-deductible contributions to your original IRA, the rules could be a bit more complex. If you DO have non-deductible contributions in your IRA, and need additional help, please let me know and I'll be glad to give you those rules.TMF TaxesRoyWant to learn more about taxes and investing? Then we have a deal for you!! The Motley Fool Investment Tax Guide is now available through Fool Mart. Be the first one on your block to own this masterpiece. There is still time available to do that tax planning (and tax saving) before the end of the year. So just click on this link (http://www.foolmart.com/market/product.asp?pfid=MF+013+I) to read more about this amazing collection of tax information. (Apologies for the shameless plug…but it is a pretty good book…if I do say so myself). In addition, if you would like to visit the Taxes FAQ (Frequently Asked Questions) area, click on http://www.fool.com/school/taxes/taxes.htm and you'll be right at the home page. Pay special attention to the "archives" section. Check it out. Finally, if you need to get to the IRS web site, click on http://www.irs.ustreas.gov to go directly there.
Thanks for the help. I have ordered TMF Investment Tax Guide & am eagerly waiting to receive it.
[[Thanks for the help. I have ordered TMF Investment Tax Guide & am eagerly waiting to receive it.]]Great!!! I can't wait for you to receive it also. And I'll be interested to hear your thoughts on the book after you read it.Thanks for the order AND your questions...TMF TaxesRoy
Best Of |
Favorites & Replies |
Start a New Board |
My Fool |