Hi,

I had rolled over approximately 25K from a 401K to a Traditional IRA back in 2006, in July of 2008 I made a grand bone head move buying about 2500 common shares of Freddie Mac against all good judgement. Therefore, today my IRA is worth about $2500. I would like to convert the IRA into a ROTH IRA and would like to know what the basis would be for paying tax. Also, if I do the converstion can I write anything off for my capital loss incurred. Any help with this would be very much appreciated.

hmmmmmm I remember recently discussing this with my accountant on a similar issue mainly involving the rollover. since you have a loss you might make a nice transition into a Roth. I would ask an accountant they'll ussually help you over the phone for nothin especially if your already using their services.

If its all pre-tax money then you will pay ordinary income tax on the full $2500 dollars. Your tax rate will depend on your tax situation (what your marginal rate is).

There is no opportunity to write off a capital loss.

-Joe