Hello,

I'm a bit confused about the tax liability on rolling over a IRA to a Roth. In 1999 I rolled my Annuity/IRA into a ROTH IRA account and from my research and reading of ROTH rules, tax rules, etc I don't pay taxes on the rollover amount. I'm not clear on this and am a bit confused and would like to clear my thinking up. The rollover amount was about $10k more then invested (gain). I understand I can't touch the rollover amount for 5 years but I don't plan on withdrawing from this until way down the road.

Thank you,
Erick B.

When a traditional IRA is converted to a Roth IRA, the amount converted is included in gross income for the year in which the conversion takes place. Taxes are paid on the amount converted, but the 10% premature distribution penalty does not apply. Once in the Roth IRA, the funds grow with the possibility of income tax free distributions.

Look at IRS Publication 590. It will give you the correct information. Good luck!