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I have a couple of IRAs. One is a Roth, and the other is a non-deductible traditional IRA. So I wondered if now might be the time to convert the traditional IRA to a Roth, since the market is down and the taxes involved might end up being less. I’m still not sure what I might do, but at least I found out a few things about the process. That’s the first step, right?

A call to the IRS revealed this info:

MAGI < $100,000, on line 37 of 1040 subtract amount of the converted IRA from AGI and add lines 32, 33, 34, & 35. See Pub 590. Form 8606 is used to document the conversion.

Those were my notes from the phone call. They made sense at the time, I promise! But now? Not so much.

So I took a look at Publication 590. That says:

You can withdraw all or part of the assets from a traditional IRA and reinvest them (within60 days) in a Roth IRA. The amount that you withdraw and timely contribute (convert) to the Roth IRA is called a conversion contribution. If properly (and timely) rolled over, the 10% additional tax on early distributions will not apply.

You must roll over into the Roth IRA the same property you received from the traditional IRA. You can roll over part of the withdrawal into a Roth IRA and keep the rest of it. The amount you keep will generally be taxable (except for the part that is a return of nondeductible contributions) and may be subject to the 10% additional tax on early distributions. See When Can You Withdraw or Use Assets, later for more information on distributions from traditional IRAs and Early Distributions, later, for more information on the tax on early distributions.

Much of my contributions were nondeductible, so (if I’m understanding that right) only any earnings that I may have made on them would be taxable. And in this market, that probably doesn’t amount to much.

So, while I now have a better idea of whether or not it’s a good idea to do so in my case (probably) I still have absolutely no idea how to go about actually doing it. Have any of you converted from a traditional IRA to a Roth? If you have any tips, I’d love to hear them. I think I may need to get professional help on the logistics of this. That and go dig out my previous years tax returns to see what I actually contributed, etc.

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