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Level 2

Solved

In 2017, I contributed $5,500 to a Roth IRA and recharacterized to Traditional with a gain of $1,120. If i convert the Traditional ($6,620) back to Roth, taxable/penalty?

Forum|Forum|7 years ago
June 4, 2019
1 reply
11 views

I'll add that I'd be ineligible to take a deduction on the Traditional IRA contribution. Perhaps it's best to leave as a non-deductible Traditional IRA contribution. Just looking for some help. Thanks in advance!

Best answer by dmertz

Your $5,500 nondeductible contribution gives you $5,500 of after-tax basis in your traditional IRAs. If this is your only traditional IRA account, converting the entire account, $6,620, will result in the calculations on Form 8606 determining that $1,120 of your Roth conversion will be taxable and $5,500 will be nontaxable. There is no penalty on a Roth conversion.

dmertzAnswer

Level 15

Your $5,500 nondeductible contribution gives you $5,500 of after-tax basis in your traditional IRAs. If this is your only traditional IRA account, converting the entire account, $6,620, will result in the calculations on Form 8606 determining that $1,120 of your Roth conversion will be taxable and $5,500 will be nontaxable. There is no penalty on a Roth conversion.

cohort2004Author

Level 2

Thanks for the quick response!