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| Retirement Saving for retirement - questions about pensions and pension schemes, 401k's, public and private company pensions, and other saving schemes. |
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07-08-2010, 04:05 AM
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Pro-rata rule for IRA conversion 2010
I think I understand most of how this rule works.
Total IRA balance: $100,000. Non-deductible: $50,000. Taxable ratio: 50% Convert amount: $20,000. Taxable amount: $20,000 * .5 = $10,000 that is taxable. Tax Rate: 28% Total Tax = $10,000 * .28 = $2,800 that I owe. So after this, what happens? This means for the next year, I really only have $80,000 total, with $40,000 of non-deductible? 
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