Roth conversion ... again

May 10, 2010 5 Replies
A

OK, I've just gone through the whole process to take advantage of the Roth IRA conversion rules.



I'm in the process of rolling over my Rollover IRA into my employer's 401K plan.



I contributed to a non-deductible traditional IRA for 2009.



Now a few questions -


- Can I rollover this non-deductible IRA to a Roth IRA with basically no tax liability? [My other retirement accounts are a Roth IRA and my employer's 401K.]


- Can I do this immediately, or do I need to wait till next year because I just recently did the rollover from the non-traditional IRA to the 401K?


- Can I make a contribution to a non-deductible IRA for 2010 now and roll over the 2009/2010 contributions together?



Thanks, Anoop


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P

Yes. The only taxable amount will be any positive earnings since you made the 2009 contribution.

You can do it now. (I think you meant rollover of your traditional IRA created by a rollover from a prior employer's plan) to the

401(k).) What matters is your traditional IRA inventory as of 12/31/2010. See Part I of Form 8606. (Bump all years forward by 1 when looking at the currently available form.)

Yes.

Phil Marti VITA/TCE Volunteer

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A

I actually meant whether I can do the conversion of the non-deductible IRA to a Roth IRA immediately after rolling over the Rollover IRA to the 401K. Based on your response, it sounds like the answer is "yes", mainly because all that matters is the balance in the traditional/rollover IRAs at the end of 2010.

Also, if I go down this path (i.e. all rollover IRA funds are now in the 401K), and the traditional IRA contributions are converted to a Roth IRA, then the balance in my traditional/rollover IRAs on form 8606 at the end of the year would be 0. Do I have that right?

Thanks for the response.

Anoop

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P

Yep.

Phil Marti VITA/TCE Volunteer

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A

Thanks again.

One more question: Does the rollover from the Rollover IRA to the 401K need to be reported to the IRS?

Anoop

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P

Yes, on line 15 of your 1040.

Phil Marti VITA/TCE Volunteer

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