Catherine Posted December 8, 2010 Report Share Posted December 8, 2010 Hi folks -- I've looked and can't find the answer - someone here must know. Client has an IRA that contains some non-deductible contributions (basis known), AND money from a Keogh that was converted. Client is considering converting at least some of this to Roth IRA. Question is, to get the percentage of non-deductible money, is the original Keogh contribution used, OR the value when they were rolled into the IRA? TIA, Catherine Quote Link to comment Share on other sites More sharing options...
Gail in Virginia Posted December 8, 2010 Report Share Posted December 8, 2010 I believe that you only use the amount of the original non-deductible contributions. Since the earnings were never taxed, they can't be treated as though they are non-deductible contributions to get the percentage of non-deductible money since what you are really determining is the amount that is not taxed upon withdrawal.I am not sure that I am stating this well, so I hope that you can tell what I mean. I am not sure I quite understand your post either - when you ask about using the amount of the original Keogh contribution is that the same as the amount that was contributed on a non-deductible basis? Most Keogh plans are deductible. Quote Link to comment Share on other sites More sharing options...
Pacun Posted December 9, 2010 Report Share Posted December 9, 2010 Give us some numbers and we might be able to understand better. For example, Keogh contributions were $30K but it grew to $40K and those $40K were rolled over to an IRA. Non-deductible IRA contributions totaled $20K. Currently there are $75K in the rollover IRA. Just by looking at the numbers, any one would say that the percentage is 66.67 for Keogh and 33.33 for non-deductible IRA. If that percentage is a very conservative number before the IRS, you might want to go with it. (I believe amount rolled over from Keogh is important, not the amount contributed). How about this: Imagine that the Keogh rollover occurred in 1990 and that the non deductible contributions were $5K each year for the last 4 years. Do you think you should make calculations every year since your non-deductible contributions didn't make any money and the percentage will change? I think we need amounts and years to make a good calculation. Quote Link to comment Share on other sites More sharing options...
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