qbteachmt
Level 15
12-30-2020
11:35 AM
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"why he would have to pay tax on the Roth conversion."
Every taking or conversion includes the computation of Basis across all Traditional IRA accounts. Of course you can make any conversion you want to. It will all be prorated against total basis and total account(s) balance for the conversion. Only the pre-tax and earnings % is taxable.
For your example, then, 25% of the conversion is not taxable.
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"Level Up" is a gaming function, not a real life function.
"Level Up" is a gaming function, not a real life function.