Yes. But since I'll still be working then,
I may have to pay 38% tax (state too) on it.
Probably better to incrementally convert
after retirement in lower tax bracket in
my case.

BreadWithSpam[at]fractious.net wrote:

- quote -

You are correct. the Fairmark wording was "For example, if you happen to
have a traditional IRA with $96,000 of money from a 401k rollover (zero
basis) and you make a $4,000 nondeductible contribution to a new IRA,
thinking you can convert it to a Roth at little or no cost, you'll be
wrong." This perpetuates my thinking, that IRA deposits which were tax
deductions somehow form a different IRA than the non-deducted money. You
are correct, that one has an IRA, the number of accounts numbers or
locations notwithstanding, and it has as basis the sum of the deposits
not deducted.
JOE

joetaxpayer <joetaxpayer[at]nospam.com> writes:
- quote -

Unfortunate terminology. If one has two IRA accounts - one
of which was funded with deductible contributions and one of
which was funded with non-deductible contributions, one does
not in any way have a nondeductible IRA and a deductible IRA.
One has a single IRA - the sum of both individual accounts -
and the overall single IRA has an effective tax basis (the
amount of non-deductible contributions overall). One may
have several IRA *accounts* but one only has one IRA (well,
one traditional IRA - Roths are, in fact, distinct) - and
one basis for it no matter how many accounts comprise the IRA
and how the non-deductible contributions are distributed
amonst them.

So, of course, for any money converted from any of those IRA
accounts, if any of the accounts had non-deductible contributions,
the overall ratio of deductible contributions to the overall
value of the combined set of accounts implies the proportion
of the conversion which is effectively after-tax dollars (and
which then, in turn, reduces the basis for the remaining IRA).

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Plain Bread alone for e-mail, thanks. The rest gets trashed.
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joetaxpayer wrote:
- quote -

Thanks.

po.ning[at]gmail.com wrote:

- quote -

Yes, and http://www.fairmark.com/rothira/expand.htm is the best full
explanation I found. It includes the fact that you may not choose
nondeductible IRAs for conversion, but must pool all IRA money to figure
how much must be taxed at conversion.
JOE

I heard from a local financial advisor that in 2010 there will be a
federal law that allows for conversion from IRA into Roth IRA and a 2
year window to pay the tax. Anyone else heard of such a law?