vlasim...[at]comcast.net wrote:

- quote -

When you convert to a Roth, the custodian will send you a
1099-R for 2007 and you will have to pay tax on the amount
converted. In order to get any benefit from the Traditional
contributions, you will have to amend your past returns. You
only have until Tuesday, April 17 to amend 2003. Years
before that are lost. If you were covered by a pension plan
at work, your deductions may be limited. In that case, you
would have to file Form 8606 to establish a basis.

It's hard to say how much tax you would owe without knowing
your total financial picture.

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<vlasimsky[at]comcast.net> wrote:

- quote -

You didn't declare anything since Roth IRA contributions
aren't reported on your return.

You report nondeductible traditional IRA contributions on
Form 8606, Part I. I would bring it up-to-date with a 2006
filing. Show your 2006 contributions on line 1, all prior
contributions on line 2, and you're set.

- quote -

Elect no withholding. Otherwise you'll have to come up with
that cash within 60 days or face a 10% premature
distribution penalty.

If the tax bite from a full conversion is too much, remember
that you don't have to convert everything at once. See IRS
Publication 590.

--
Phil Marti
Clarksburg, MD

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Over the past 5 years, I have been contributing yearly to
what I thought was a roth IRA account. I recently learned
that I setup the account incorrectly, and it was all this
time a traditional IRA account (not a roth IRA). I called
my brokerage, and they said they can convert the account
into a Roth IRA.

My questions are two fold:

1. Do I need to file amendments to my past tax returns? I
declared that I have been contributing to a roth IRA all
along, but technically, I was contributing to a traditional
IRA that was later converted to a roth IRA.

2. Should I withhold federal and/or state income taxes
during the conversion from the traditional to roth IRA? The
conversion form indicates "IRA regulations required the
custodian of the IRA from wich you are converting to
withhold income taxes at the rate of 10% from the converted
amount unless yiou elect not to have withholding apply".
Important to note is that I contributed after-tax income
into the traditional IRA account.

<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ------------------------------------------------------- >