IRA to Roth IRA conversion and total value question

Forum|Forum|3 years ago
March 24, 2023
2 replies
64 views

I made a conversion of a traditional IRA (originally funded by 401k and 'defined contribution plan' rollovers) into an existing Roth, within the same financial institution. I also have two inherited traditional IRAs (my deceased wife and deceased mother). Turbo tax is asking for the total value of my traditional IRAs as of Dec 31, 2022, the information supposedly on a Form 5498. I have not received a 5498 as I have not made contributions to the IRA, only ever to the Roth.

What total values is needed here? Do I include the inherited IRAs?

Also, the IRA securities were sold Dec 21, 2022 and converted to the Roth account, but then interest and dividends trickled in so there there was still $30 or so in the traditional IRA at the end of the year.

As the traditional IRA came from a 401k, I do not believe there are any 'undeductable' contributions - I made pre-tax contributions along with the employer contributions.

So I guess as I see it the total value in 2022 was $30, or more if I include the two inherited IRAs. The Roth is not included in the is total. Is this correct?

Best answer by dmertz

The IRA inherited from your mother is not to be included in your own 2022 year-end balance. If the IRA inherited from your wife is maintained as an inherited/beneficiary IRA and you have not chosen to treat it as your own (and are not considered to have chosen to treat it as your own because of making a contribution to it or filing to take a required distribution, if any), you do not include the IRA inherited from your wife either. If you have chosen to treat the inherited IRA as your own, it is now your IRA and no longer an inherited/beneficiary IRA and must be included in your year-end balance.

If you have no basis in nondeductible traditional IRA contributions, your year-end balance in traditional IRAs is irrelevant with regard to determining the taxable amount of your Roth conversion. Part I of Form 8606 where the year-end balance would be included on line 6 is not involved.

D

DavidD66

Level 15

The Roth is not included in the total of your traditional IRAs. Forms 5498 do not have to be mailed until May 31 of the year following the tax year being reported. You should use your year end account statement balances. You do not include the value of the inherited IRAs on Form 8606 when reporting contributions to or distributions from your own IRAs, unless you hare treating your spouse's IRA as you own - in which case you would not treat as an inherited IRA.

If your inherited traditional IRAs had basis in nondeductible contributions, you would need to prepare a separate Form 8606 outside of TurboTax and supply the program with the results. TurboTax does not support preparation of Forms 8606 for inherited IRAs. If the traditional IRAs that you inherited have no nondeductible contributions, no Form 8606 needs to be used.

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D

dmertzAnswer

Level 15

The IRA inherited from your mother is not to be included in your own 2022 year-end balance. If the IRA inherited from your wife is maintained as an inherited/beneficiary IRA and you have not chosen to treat it as your own (and are not considered to have chosen to treat it as your own because of making a contribution to it or filing to take a required distribution, if any), you do not include the IRA inherited from your wife either. If you have chosen to treat the inherited IRA as your own, it is now your IRA and no longer an inherited/beneficiary IRA and must be included in your year-end balance.

If you have no basis in nondeductible traditional IRA contributions, your year-end balance in traditional IRAs is irrelevant with regard to determining the taxable amount of your Roth conversion. Part I of Form 8606 where the year-end balance would be included on line 6 is not involved.