Combining IRA's

mbient · #1 (**permalink**) 06-06-2009, 02:09 AM

I have a Contributory IRA, the value of which is underwater, relative to the basis established by my continued contributions of post-tax funds after my income exceeded the maximum that allowed the contributions to reduce my taxable income.

I have a SEP IRA which has a value equal to the amount the Contributory IRA is underwater. The contributed funds in the SEP are all pre-tax.

If I combined the two, the value of the combination would equal the basis of the post-tax funds contributed to the Contributory IRA.

I would like to combine the two so I can then convert the combo to a Roth IRA and not pay any taxes on the conversion, based on the basis established by the post-tax contributions to the Contributory IRA.

Is that possible?

Did I make myself clear?

User Name · #2 (**permalink**) 06-06-2009, 12:02 PM

Quote:

Originally Posted by mbient

I have a Contributory IRA, the value of which is underwater, relative to the basis established by my continued contributions of post-tax funds after my income exceeded the maximum that allowed the contributions to reduce my taxable income.

I have a SEP IRA which has a value equal to the amount the Contributory IRA is underwater. The contributed funds in the SEP are all pre-tax.

If I combined the two, the value of the combination would equal the basis of the post-tax funds contributed to the Contributory IRA.

I would like to combine the two so I can then convert the combo to a Roth IRA and not pay any taxes on the conversion, based on the basis established by the post-tax contributions to the Contributory IRA.

Is that possible?

Did I make myself clear?

You will pay taxes on any accounts you have not already paid taxes on. There is no way around the tax man. I would start a new Roth IRA so you have diversification between pre / post tax accounts.

mbient · #3 (**permalink**) 06-08-2009, 01:57 PM

Good answer, but that wasn't the question. Obviously, I did not make myself clear.

Checked with the IRS and the answer is yes.

cafetax · #4 (**permalink**) 06-16-2010, 02:02 PM

The only way you can seperate the basis from the pre-tax money is to move the pre-tax money to a qualified plan (like a 401k) and leave the basis in the IRAs to convert. Otherwise all IRAs are considered in aggregate for basis purposes when converting or taking distributions.

Hopefully that answers your question.

-Joe

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