dmertz
Level 15
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Retirement tax questions

"I want to roll my after tax IRA contribution to a Roth IRA and the earnings into a traditional IRA. How do I do that?"

 

You can't do that.  The reference that you provided addresses a rollover from the traditional account in an employer's qualified retirement plan like a 401(k) and is not permitted to be applied to a Roth conversion from a traditional IRA.

 

To accomplish what you want, you would have to roll all of the pre-tax funds to a traditional account an employer's qualified retirement plan, not to a traditional IRA.  (This is different than what is described in IRS Notice 2014-54.)  Because only pre-tax funds are permitted to be rolled over to the qualified retirement plan, rolling over all of the pre-tax funds from your traditional IRAs to a qualified retirement plan would leave just the after-tax funds in the traditional IRAs that could be converted to a Roth IRA tax-free.

 

Still, if the earnings in the traditional IRAs are relatively small, it would generally make more sense just to convert the all of the funds from the traditional IRAs to a Roth IRA and pay the taxes on the pre-tax portion of the conversion.

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