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New Member
posted Jun 1, 2019 11:08:44 AM

I made a nondeductible contribution to my IRA and then converted that contribution immediately to a roth. I believe it is taxing me on an ira distribution

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2 Replies
Alumni
Jun 1, 2019 11:08:45 AM

The short answer is yes, that is correct.  Some of the distribution will be taxable but a portion will not be taxed.

The long answer is that a Traditional to Roth conversion is an IRA distribution subject to tax.  As you have made nondeductible contributions to the Traditional IRA, the fraction of the distribution that is tax free is the ratio of the total of your nondeductible contributions in all your Traditional IRAs to the total 12/31/2018 value of all your Traditional IRAs.

Form 8606

https://www.irs.gov/pub/irs-prior/f8606--2018.pdf
is used for this calculation and makes an adjustment for the possibility that your transactions occurred in 2019.

Full details on contributions, distributions, and conversions may be found in IRS publications 590-A and 590-B:

https://www.irs.gov/pub/irs-pdf/p590a.pdf

https://www.irs.gov/pub/irs-pdf/p590b.pdf



Level 15
Jun 1, 2019 11:08:46 AM

If you started with a zero balance in ALL IRAs and then did this, you did not go through the interview properly.