Roth Conversion

[Ginger]

Over my working years, I contributed to a traditional IRA account (non-deductible) and am thinking of converting over to a Roth. Would any of these funds be taxable since it was all non-deductible? Thanks

[REWahoo]

Ginger, here is a good source of Roth IRA conversion information: Guide to Roth IRA, 401k and 403b Retirement Accounts

[Animorph]

I'm pretty sure the earnings are taxable. The original non-deductible contributions are not.

[kaneohe]

From REW's link: this may be relevant.........

If you made nondeductible contributions to a traditional IRA at any time in the past, and haven't previously withdrawn the nondeductible contributions, then your partial conversion will be partly nontaxable. The rules that apply here are the same as for any distribution from a traditional IRA. You treat all traditional IRAs as a single IRA, so you don't get a different result depending on which IRA you convert. You add up the total value of all traditional IRAs and also the total amount of nondeductible contributions to those IRAs to determine what percentage of the conversion amount is taxable. For example, if 60% of your IRA balance comes from nondeductible contributions and you convert $8,000 of that IRA, you'll report $3,200 of income from the conversion (40% of $8,000).

It would be nice if you could specify that you're converting only the nontaxable portion. The rules don't let you do that.

[Ginger]

Thanks for the replies. I need to investigate a bit further, but it might benefit us to do a partial conversion. So in simple terms for example, if you put in $100,000 in a non-deductible IRA and earnings are $50,000 over the years, you are paying the tax on $50,000 Does that $50,000 in earnings then throw you into a higher tax bracket making tax season another nightmare?

[kaneohe]

You suggest but haven't said definitely that you have no other TIRAs besides this non-deductible one..........is that correct? No rollover IRAs from corporate plans?
You can use a tax calculator like this one to estimate your taxes ........you'll have
to know what your other earnings would be......wages, interest, dividends, capital gains, etc. (and your deductions too).
TurboTax® Free Tax Calculators - Free Income Tax Estimators, Tax Guides, Tax Help

it's the one in the middle.......taxcaster. You can do the estimate w/, w/o the conversion to see what impact the conversion does. Also you can do a partial conversion. The tax impact depends on your own circumstances.