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bkb1956, Finance Enthusiast
Category: Finance
Satisfied Customers: 3275
Experience:  IRS Enrolled Agent, 18+ years of experience in tax preparation with associated finance experience.
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For lane if i convert 50000 from traditional ira to roth is

Customer Question

For lane if i convert 50000 from traditional ira to roth is it 100% taxable or pro-rata taxable based on "cost basis" of traditional and can ya define "cost basis" calculation if applicable?
Submitted: 7 months ago.
Category: Finance
Expert:  bkb1956 replied 7 months ago.

Welcome to Just Answer. My name is ***** ***** I will be happy to assist you.

The Traditional IRA or retirement plan being converted will consist of pretax contributions and earnings. In such cases, the entire amount converted — contributions plus earnings — will be taxable as ordinary income. In some cases, an investor may hold “after-tax” funds in his or her IRA, such as in a non-deductible IRA. Since the contributions were previously taxed, only subsequent earnings would be taxable on a conversion to a Roth IRA.

In other words, your pre-tax contributions PLUS earnings will be 100% taxable.

The following link contains excellent information as well as an example:

Please let me know if I can assist you further.

Thank you and best regards,


Expert:  Lane replied 7 months ago.

Hi ... thanks for asking for me ... i'm not getting alerts when you ask for me for some reason ... Sorry for the wait.


Only growth above cost basis is taxed.


Cost basis is the amount contributed that was not deductible. (Said differently, after tax contributions)


Amount contributed for which no deduction was given IS your costs basis.


As an example, dollars in an IRA where all contributions came from a pre-tax (non-designated Roth account) 401(k) that was rolled over to an IRA, is 100% taxable.


Hope this helps.


Thanks for waiting on ME!



Expert:  bkb1956 replied 7 months ago.

First expert here - since Lane confirmed my initial answer to you, please let me know if I can assist you further.

Best regards,