bobg
Apr 6 1999, 06:03 PM
I converted a non-deductible traditional IRA to a Roth IRA in Jan 98. This year, I received a 1099R from my account with the total account value as the disbursement. The question is: am I only liable for the difference in value between the total amount minus the actual contributions? How do I clarify that on the tax forms?
Kathy
Apr 6 1999, 06:08 PM
You need to get a Form 8606 which will walk you through determining the taxability of your nondeductible traditional IRA. The first question is: was this your only IRA or do you have others? With traditional IRAs you first lump them all together and then determine what percentage of the total value represents your basis (your nondeductible contributions). Then, if you only convert part of that total, the same percentage of your converted amount is treated as a return of your bais and the rest is treated as a taxable distribution of earnings, growth and previously deducted contributions.
You should have been filing a Form 8606 for each year that you made nondeductible contributions to your IRA which is how you (and the IRS) determine your basis in your IRA.