non deductible ira to roth ira
The IRA consists of $90,000 in non-deductible contributions and $10,000 in earnings. If she decides to convert the entire IRA to Roth, she would only have to pay tax on the earnings portion ($10,000). At a 30% tax rate, she would owe $3,000 in tax to convert the entire $100,000 to Roth.If Smith had no earnings in this IRA, the entire $100,000 (all non-deductible contributions) could be converted with no tax liability.f you happen to earn over the IRS limits, you can still contribute to an IRA, but you will not be entitled to an IRA contribution deduction on your tax return. This is known as a non-deductible IRA contribution, which requires you to file Form 8606 with your tax return listing the contribution as such.