ROTH Conversion
Client has one (1) Traditional IRA (25% nondeductible, 75% deductible) and one (1) Traditional 401K account.
I want to convert only the non deductible portion of the traditional IRA. Can I separate the deductible and non deductible portions by transfering the 75% deductible portion of IRA to the 401K account and then convert the remaining 25% non deductible amt to a ROTH IRA?
My current understanding is that the traditional 401K is not included in the prorata calculations.
Permalink Submitted by Alan - IRA critic on Thu, 2019-01-24 15:23
Yes, rollover of the pre tax balance to an employer plan that accepts IRA rollovers is the only way to isolate the IRA basis for conversion or distribution. The conversion will be tax free. However, the rollover to the 401k should now be done first since the conversion cannot be recharacterized if the 401k plan does not accept the IRA rollover, perhaps because it will only accept IRA rollovers from “rollover IRA” accounts. Client probably does not have a rollover IRA account.
Permalink Submitted by Ron Rahall on Thu, 2019-01-24 16:23
thanks alan