Can I roll over only the nondeductible contribution portion of my traditional IRA to a Roth IRA and thereby avoid the taxes that would be due on a rollover of my IRA earnings?
No. “You can’t just take out the cream,” says Ed Slott, a CPA in Rockville Centre, N.Y., and publisher of the Ed Slott’s IRA Advisor newsletter. If you choose to do a partial conversion, every dollar you convert will be treated as a “blended” dollar. For example, if 20% of your current IRA assets consists of nondeductible contributions and the remainder is deductible contributions and earnings, you will owe income tax on 80 cents of each dollar you convert to Roth IRA status. Note: If you have multiple IRAs, you must add the assets together when calculating what portion of your partial conversion will be taxable.
Related Questions
- Can I roll over only the nondeductible contribution portion of my traditional IRA to a Roth IRA and thereby avoid the taxes that would be due on a rollover of my IRA earnings?
- Can I make a nondeductible contribution to a traditional IRA (Individual Retirement Account) or to a Roth IRA if I have no taxable compensation?
- Is it possible to rollover my 401k with a loan to an IRA to avoid taxes and penalties?"
