Roth Conversion

[jheckman]

I have a client that has 2 IRAs. One is an IRA that has non-deductible contributions in it only and another IRA that was created from a prior employers 401(k) rollover many years ago. He currently works at a company that allows IRA's to be transferred into his 401(k). He would like to rollover the traditional IRA that has zero basis into his 401(k) and later convert the other non-deductible IRA to a Roth. Can this be done? He is trying to avoid the rule relating to converting all IRAs into a Roth.

Thanks for anyones suggestions,

John

[Lion]

Yes

Yes.......

[WhiteOleander]

What rule that says you must convert all IRA's? I missed that.

[jheckman]

Roth Conversion

If someone created the non-deductible IRA to convert to a Roth and did not realize that to do so you would have to include all IRAs upon conversion use a pro-rata piece of the non-deductible IRA unless you converted all IRAs to the Roth,

[Lion]

You don't

You don't have to convert all IRAs. But, the taxable part of any conversion you make will be based on the deductible vs. non-deductible contributions of all IRAs no matter which accounts are used for the funds to convert. So, if that client rolls over an eligible IRA into his employer's plan and then has only a non-deductible IRA (or even an IRA with non-deductible contributions included as well as deductible contributions) he has eliminated tax (or lowered his potential tax) on his conversion of his contributions.