Pro-rata formula question for doing Traditional IRAs to ROTH conversion please

[Intchk]

I have one IRA account with deductible and other one is non-deductible.

If I do the some of the amount to ROTH conversion this month(November)

for this year, will I be using  calculations for "pro-rata" November conversion

amount, OR end of this year amount in the converted amount(ROTH account)?

Read that all Traditional IRAs account amounts used from the end of the year

amounts for sum year end value as part of the formula.

Thanks!

[macuser_22]

You can NEVER withdraw ONLY the nondeductible part - it must be prorated over the entire value of ALL Traditional IRA accounts which include SEP and SIMPLE IRA's. (For tax purposes you only have ONE Traditional IRA which can be split between as many different accounts as you want, but for tax purposes they are all added together).

For example using rough figures: if you had $60K of nondeductible contributions in an IRA with a total value of $600K (10:1 ratio), then when you take a $60K distribution from any IRA account $6,000 would be nontaxable and $54,000 would be taxable (same 10:1 ratio) , with the remaining $54K of basis staying in the IRA for future distributions. As long as there is any money in the IRA, there will be some basis.

TurboTax will ask for your non-deductible "basis" and then the *Total Value* of *all* Traditional IRA, SEP and SIMPLE accounts as of Dec 31, of the tax year. That is so the prorating of the basis can be properly proportioned between the current years distribution and the remaining IRA value. That is done on the 8606 form.

[Intchk]

Thanks!

On the " TurboTax will ask for your non-deductible "basis"",

will  I be using the my non-deductible contributions amount OR 

amount consists of contributions,earning, and growth please?

My total non-deducible contribution was 10,000 (over few years prior to ROTH

available). Now this mutual fund account has 35,000.  so for "basis",

use 10K or 35K?

Thanks in advance!!

[dmertz]

Your basis is the amount of your nondeductible contributions remaining in your traditional IRAs, so your basis would be $10,000 assuming that you have made no distributions from your IRAs in or after the year for which you first made a nondeductible traditional IRA contribution.  Investment earnings do not add to your basis.

Some basis is distributed with each regular distribution from any of your traditional IRA accounts, but some basis will always remain as long as the total of the year-end balances in all of your traditional IRAs is not zero.

[Intchk]

Thank you!

Appreciated!

[Critter]

It is IMPERATIVE that you print out a copy of the form 8606 and keep it with your IRA information so you have the remaining non deductible amount available in the future when you either make other conversions or take distributions.   Do NOT expect ANY tax program OR the IRS to keep track of this amount for you.  

[Intchk]

Thanks!  Appreciated!