Thanks! Seems like I should move the money left that I will convert to a money market.The only caution I will add is that the IRS does not accept "The market ate my basis" excuse. What I meant to say is that, with the dollars that are left behind, DO NOT let that money ride in the market, and therefore risk the value reducing prior to Roth conversion.
The way to make sure that the value remains the same is to invest amount equal to the basis in a money market fund. No stock funds, no bond funds; they both fluctuate in value daily and can dip below the stated basis if you roll the remaining amount out to the 401(k).
Say you have $10k in a Traditional IRA of which $4k is the basis, $5k is rolled over from a rollover IRA, and $1k is the earnings that are pre-tax.
You may initiate a rollover of the $6k to 401(k) [ $5k rollover IRA + $1k pre-tax earnings ]
While that rollover in progress, the $4k because it was led to ride in the market, became $3.8k, which you convert to Roth.
While technically the tIRA is left with $0 balance, in the eyes of the IRS, $200 of the non-deductible contributions traveled from the IRA to the 401(k).
And 401(k) plans CANNOT accept non-deductible contributions from a traditional IRA; only pre-tax monies.
THIS is what gets people into trouble ...
Statistics: Posted by Palsgraf86 — Tue Apr 23, 2024 6:00 pm — Replies 4 — Views 166