topic Spousal Roth Conversion Question when married and filing jointly in Retirement tax questions

Spousal Roth Conversion Question when married and filing jointly

AMJ10 — Thu, 09 Jan 2025 05:04:24 GMT

If I have $1 million in traditional IRA balances and my non-working spouse has also been accumulating spousal traditional IRA balances with contributions every year and now has $200,000 in balances. We make too much to have a Roth IRA and we did not do an immediate conversion to Roth as we should have done. $75k is contributions and $125k is earnings/appreciation. She wants to convert all her traditional IRA balance to a Roth IRA - (and we are married filing jointly). Do we need to aggregate both her IRA and my IRA balances ($1.2 million combined) in considering the conversion? This would be a pro- rata amount and not get the full benefit we want, OR do we just consider her $200,000 IRA as the total amount of IRAs under her name when doing the Roth conversion?

Re: Spousal Roth Conversion Question when married and filing jointly

dmertz — Thu, 09 Jan 2025 15:19:34 GMT

IRAs are individual accounts. Form 8606 applies only to one individual. Only her IRA balance and her basis in nondeductible traditional IRA contributions is taken into account when determining the taxable amount of a distribution or Roth conversion from her traditional IRA, calculated on her Form 8606.

If she has basis in nondeductible traditional IRA contributions, a Form 8606 for her was required to be filed each year she made such contributions. If she has no basis in nondeductible traditional IRA contributions, the entire distribution or Roth conversion is taxable.

Your own nondeductible traditional IRA contributions would have been reported on your own Forms 8606.