dmertz
Level 15

Retirement tax questions

"if I roll over all my after tax contributions to a Roth and leave my traditional ira alone which encompasses all my pre-tax contributions (all my work 401k plans have been rolled over to this ira), aren’t we saying the same thing of what the final outcome will be?"

 

No.  IRAs and 401(k) plans are subject to different sections of the tax code.  A specific provision of the tax code that permits only pre-tax money to be moved from an IRA to a 401(k) is what allows the separation of pre-tax money from after-tax money in an IRA, otherwise distributions (including Roth conversions) from an IRA are specified by the tax code to be a proportionate mix of the pre-tax and after tax money.

 

You got bad information from the broker.  Nothing on a Form 1099-R indicates the amount of a regular distribution (including a Roth conversion) that is taxable.  The taxable amount is determined on Form 8606 by performing the pro-rata calculation (which depends on the amount remaining in your traditional IRAs at year-end) to determine the proportionate taxable and nontaxable amounts of the distribution.  The taxable and nontaxable amounts cannot be determined until year-end when the value of your traditional IRAs is known.  Only if the value of your traditional IRAs at year-end is zero will be the case that all of your after-tax money was distributed from your traditional IRAs.