dmertz
Level 15

Retirement tax questions

I'm assuming that this is SR5060's only traditional IRA.  If the amount of the conversion  plus the amount remaining at year-end is less than the basis, the entire conversion will be from nontaxable basis.  The amount of basis that remains in the traditional IRA will still be greater than the year end balance, so some amount of basis will eventually be able to be applied to future deductible contributions, pre-tax funds rolled in from a qualified retirement plan or growth in the traditional IRA.  Even if there are none of these in the future, waiting until 2026 to make the final Roth conversion of the small amount will allow unrecoverable basis to be claimed as a miscellaneous deduction subject to the 2%-of-AGI floor and the standard deduction also reverts to half of its present amount.  Of course if the amount of unrecoverable basis is small, it's possible that there won't be enough to itemize and the unrecoverable basis will be lost anyway.