Taxes on a Roth conversion?

[jay5336]

I am trying to figure out the amount of taxes I am going to have to pay on a Roth Conversion I just completed. I have a 401k through my employer. In 2016 I opened a traditional IRA account with Vanguard and contributed 2750$ (all non-deductible contributions) in Dec 2016. (This is probably not relevant, but I I also opened a Roth with Schwab at the same time and contributed the same amount to it) . Then an additional 300$ (nondeductible)  to the Vanguard IRA in Jan 2017. Then I left that account untouched until this month (April 2020). The balance had grown to 3329$ by then (the market value was 3404.15$  on Dec 31st 2019) . I contributed another 5500$ this month, April 2020,  (again, all nondeductible) and immediately converted the whole account to a Roth with Vanguard (total account value of around 9000$). What kind a tax liability  resulting specifically from this conversion am I looking at when I file my return for year 2020?

[macuser_22]

That will depend on the total aggregate value of ALL Traditional, SEP and SIMPLE IRA accounts that exist on December 31, 2020.   The total non-deductible basis will be prorated between the amount of the conversion and the 2020 year total end value to determine the taxable amount.

[dmertz · Accepted solution]

I assume that you did this Roth conversion in 2020.  With  a total of $8,550 of nondeductible traditional IRA contributions, as long as you have no other traditional IRA accounts at the end of 2020 (do not make the mistake of rolling the 401(k) into an IRA before the end of 2020), the nontaxable amount will be $8,550 with the remainder being taxable on your 2020 tax return.  Your 401(k) is not an IRA, so it doesn't factor into the calculation.