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Level 2

Question

Roth IRA

Forum|Forum|3 years ago
February 9, 2023
1 reply
12 views

I made contributions to a non-deductible IRA of $28,000 and then converted this to a Roth IRA. The contributions were in a mutual funds portfolio and the increase in value was $3489 by the time of conversion. What is the taxable amount of this conversion?

Turbotax calculated $842 as non-taxable (I had considerable money in another traditional IRA) and $27,158 as taxable. I don't think this was correct, so how should I have entered the data into Turbotax?

Level 8

Mutual funds are different from other investments securities. With mutual funds, you will owe tax on two levels if a stock holding in your mutual fund pays dividends, then the fund manager later sells the stock at a higher value than they paid for it:

A dividend tax, generally applied at your income tax rate
A capital gains tax, which will be taxed at capital gains rates.

Without seeing the actual return/form I can only speculate further.

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