- Mark as New
- Bookmark
- Subscribe
- Subscribe to RSS Feed
- Permalink
- Report Inappropriate Content
Retirement tax questions
3) Correct. The distribution will be a nontaxable distribution of contribution basis. Assuming that this is a nonqualified distribution, the $0 taxable amount will be calculated on your 2020 Form 8606 Part III.
4) If you have no other money in traditional IRAs, the only part of the Roth conversion that will be taxable is the earnings that the 2019 contributions incurred while the 2019 contributions were in the Roth and traditional IRAs. If you do have other money in traditional IRAs, the calculations on Form 8606 will result in only a portion of the basis acquired by making the nondeductible traditional IRA contribution (that results from the recharacterization) being applied to the Roth conversion, with the remainder of the basis in nondeductible traditional IRA contributions remaining with the traditional IRAs to be applied to future distributions until it is all distributed with distribution that brings the traditional IRA balance to zero at year end.