Last month I did a total conversion of my sister's IRA and current holdings in 403b to a Roth.
Within the IRA, she had about $25000 of non-deductible contributions.
Which of the following is the correct taxable portion,using I for the money from the IRA and W for the contribution from the 403b?
T = I + W (1-25000/I)* I + W (1-25000/T)* (T)
I assume that further conversions from the 403b are not affected by the first conversion that included the non-deductible part of the IRA.
T = W + (I - 25000)
All of the 403b monies are taxable and since this was a total conversion of (presumably from your wording) her only Trad IRA account the taxable part from the IRA is simply the total value minus the non-ded contributions.
At this point all the non-ded contributions are gone so any future conversions (unless she makes future non-ded trad IRA contributions) will be 100% taxable.
-- Rich Carreiro snipped-for-privacy@rlcarr.com
Thanx, that's what I thought.
Her income is too high to make direct Roth contributions.
She will not be making any further IRA contributions.
Contribution to the 403b will be immediately converted to the Roth, no point paying taxes on earnings in the 403b, not to mention that the Roth has many more investment choices, e.g., ETFs, stocks, options, and more mutual funds.
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