IRA COnversion to Roth

[Guest goodmans]

hi.. I had a traditional IRA account. there was $5800 in it this amount consisted of a 1997 $2000 deposit and a 1998 $2000 deposit both of these deposits were nondeductible. $1800 is the interest. In 1999 i converted the $5800 to a roth IRA. What amount do I have to pay taxes on ?? the 1099-r states 0 as the taxable amount.

please help... thanks a lot.

[Michael Devault]

I believe that the $1800 of earnings would be taxable in the year of conversion to the Roth IRA. Once it's established as a Roth, future earnings could be recovered tax free, if the required holding period, etc. is met.

Have you checked with the custodian that issued the 1099-R to get their side of the story? They may have issued it incorrectly and need to re-issue it.

Good luck.

[BPickerCPA]

Michael's answer is correct, UNLESS you had other IRA accounts. If so, you have to compute the taxable amount of the conversion based upon ALL IRA balances, not just the balance of the converted account.

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Barry Picker, CPA/PFS, CFP

New York, NY

[Guest goodmans]

thanks for the help !!