Commingled Traditional IRA funds
I have pretax and post tax funds in a traditional IRA. I know the basis of the post tax funds via my IRS Form 8606. When I have filled out the 8606 form, I have always used the amount of my after tax contributions to adjust the basis. Is it assumed that all the investment earnings from the IRA are taxable? Or are the earnings prorated based on the ratio of the pre and post tax investments. The reason for the question is that I am able to roll all the pretax dollars into my 403b and they will only accept pretax dollars. The remaining funds would be rolled/converted into my ROTH IRA.
Thx
Pete
Permalink Submitted by Alan - IRA critic on Tue, 2019-10-22 16:19
All gains are pre tax. There is no need to allocate gains between those on after tax contributions and pre tax contributions. Form 8606 treats all your IRA accounts as one combined account, so it does not matter which account you made non deductible contributions to or which account funds the rollover to the 403b. You just need to keep the total amount of your current Form 8606 basis in any of your remaining IRA accounts. The rest is all pre tax and should go to the 403b. The 403b might ask you to certify that the rollover does not include ANY IRA basis. Once the 403b has accepted and deposited the IRA rollover, you should then convert ASAP. The conversion will either be tax free or have a very small amount of recent gains that would be taxable.