Need Help to Correct A Conversion Error

[Guest Jennie Y]

In May 98, I opened an Roth IRA and contributed $2000. In June 98, I transfered my entire traditional IRA account into my Roth IRA account thinking that I had converted or rollovered from traditional to Roth. The error that I made was I did not check the box IRA Direct Rollover on my Account Transfer Form application. My brokerage firm simply transfered the equity from my IRA to my Roth Account. On my 1998 5498 Form for the Roth account, there was no indication for the rollover dollar amount. When I filed my 1998 income tax, I did not file the 8606 form with my 1040 (my error #2).

Question 1. I want to be official Rollover to Roth IRA, not just transfering. What should I do?

Question 2. Do I rollover the origninal transfered amount? If not, how am I going to calculate what is the right amount to rollover? I had sold my transfered equities and bought/sold something elses and bought/sold something elses.

Question 3. Should I rollover in 1998 and do a tax amendment for 1998? or should I rollover now and file as 1999 tax?

Please Advise.

Thanks in advance!

[John G]

I don't see how any custodian could move money from a traditional IRA to a Roth without it being flaged as a conversion. Regardless of what boxes you may have checked, regular --> Roth is a conversion.

Go back to your custodian and speak to someone in the IRA area, preferably a supervisor. Either they are making some big mistakes or you are misunderstanding what was done. You can't solve that problem on a message board.

You need to clarify exactly what was done in your accounts before you get to the tax question.