Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Grommit who wrote (51259)	4/9/2013 9:57:00 AM
From: Jurgis Bekepuris	Read Replies (1) \| Respond to of 78688

You may want to walk through IRS form 8606 and its instructions. Or consult a real tax accountant. I'd be very interested to hear any info you get. I think that my understanding is correct, but I'd be happy to be proven wrong, since then I could do this too. :)

To: Grommit who wrote (51259)	4/9/2013 12:38:30 PM
From: MCsweet	1 Recommendation Read Replies (2) \| Respond to of 78688

You can do this conversion, but my understanding is that converting to the Roth IRA you have to use the average cost basis of all your traditional IRAs, not just the $5000 contribution, so if you have an regular IRA with a low cost basis (i.e., most of the money came in pre-tax), then a good amount of the conversion will be taxable. I did a major Roth IRA conversion awhile ago that cleared out my traditional IRAs and have been doing the 5k conversion arb every year for the past couple of years. I am just now finishing paying off the huge tax hit of the traditional IRA conversion, but the Roth account has really taken off so it looks like it is worth it. However, when Obama talks about limiting IRAs it makes me think I maybe shouldn't be so aggressive in loading up the Roth IRA going forward. I am not an accountant, so feel free to consult one as opposed to taking my word for it. MC