topic How do I determine the basis of my IRA if it was opened as a 401K rollover 5 years ago, and has had no contributions since the rollover? in Retirement tax questions

How do I determine the basis of my IRA if it was opened as a 401K rollover 5 years ago, and has had no contributions since the rollover?

Sillyna511 — Tue, 04 Jun 2019 00:20:45 GMT

I am in the process of converting a Traditional IRA to a Roth IRA (the full amount). I know I will need to complete a Form 8606 to report this conversion, but the form requires a "total basis". The traditional IRA was opened as a rollover approximately 5 years ago, from a 401K after leaving the company. No contributions have been made to the IRA since it was created 5 years ago, but the account has earned interest.
How do I determine the basis of my IRA? Is it simply the full amount of the IRA at the time I converted it? Is it just the amount that was rolled over 5 years ago? Or just the interest earned? Help!

The basis of a Traditional IRA is the amount of non-deduc...

MinhT — Tue, 04 Jun 2019 00:20:47 GMT

The basis of a Traditional IRA is the amount of non-deductible contributions you made to that IRA.

As the IRA was a rollover from your 401(k) plan and you made no contributions since the rollover, the basis is 0. This is because all your contributions to your 401(k) were made with before-tax dollars.

OK so if the basis is zero.... am I correct to believe...

Sillyna511 — Tue, 04 Jun 2019 00:20:48 GMT

OK so if the basis is zero.... am I correct to believe the entire amount of the conversion will be taxable?

Yes, the entire conversion to a Roth IRA is taxable.

MinhT — Tue, 04 Jun 2019 00:20:52 GMT

Yes, the entire conversion to a Roth IRA is taxable.

TurboTaxMinhT's answer assumes that you had no after-tax...

dmertz — Tue, 04 Jun 2019 00:20:53 GMT

TurboTaxMinhT's answer assumes that you had no after-tax basis in your 401(k) that got rolled over to the IRA. Most people have no after-tax basis in their 401(k).

Re: TurboTaxMinhT's answer assumes that you had no after-tax...

emailbox7 — Wed, 25 Jan 2023 21:52:34 GMT

Actually not a reply but a related question. For a few years I had IRA basis and "year end value". Then I rolled over 401K into IRA. Do I have to add "year end value" of traditional IRA to the "year end value" of rollover IRA while using the old traditional IRA basis?

Re: TurboTaxMinhT's answer assumes that you had no after-tax...

dmertz — Wed, 25 Jan 2023 22:07:51 GMT

You must enter the total year-end value of all of your traditional IRAs, including the rollover IRA. You basis in nondeductible traditional IRA contributions applies to your traditional IRAs in aggregate.