Which amount should the brokerage use for the 1099-R?

By Denise Appleby AAA
A:

I converted a Traditional IRA to a Roth. The conversion was a stock equity with a cost basis of $19,000 in the Traditional IRA. The day of conversion, the value was $34,000. Which amount should the brokerage house use for the 1099-R?



Assets in IRAs do not carry a cost basis for tax purposes. Therefore, distributions and Roth conversions are taxed at the value of the assets based on their value at the close of business on the day the transaction is processed. In your example, the 1099-R should show an amount of $34,000.(To learn more about Roth IRA conversions, check out , and Roth IRAs Tutorial.)



This question was answered by Denise Appleby(Contact Denise)



RELATED FAQS

  1. How does the Canada Pension Plan (CPP) work, and what asset mix does it hold?

    Learn the difference between a chartered financial analyst and the Canadian pension plan. Explore Canadian retirement options ...
  2. Is it a good idea to add a reverse mortgage to your retirement strategy?

    A reverse mortgage can be a great way to increase retirement income. Does it work for everyone? What happens after a homeowner ...
  3. What are the keys to setting up a trust fund?

    Setting up a trust to secure your assets for a beneficiary allows you to set the terms under which the beneficiaries are ...
  4. What does amortization mean in the context of a pension plan?

    Discover when and why accountants use amortization techniques in the context of pension plans, and why those changes help ...
RELATED TERMS
  1. Senior Move Manager

    Senior move managers (SMMs) help seniors downsize and relocate ...
  2. Elder Care

    Elder care, sometimes called elderly care, refers to services ...
  3. Gold IRA

    Definition of Gold IRA
  4. Eligible Transfer

    An IRS-allowed movement of assets into or out of an individual ...
  5. Death Master File (DMF)

    Also known as Social Security Death Index. A list of people whose ...
  6. Leveraged Benefits

    The use – by a business owner or professional practitioner – ...

You May Also Like

Related Articles
  1. Professionals

    Retirement Bliss? Not So fast: When ...

  2. Professionals

    Multiple Accounts? Here's How to Calculate ...

  3. Professionals

    Financial Planning Tips And Resources ...

  4. Professionals

    Where You Clients Should Retire (For ...

  5. Professionals

    Should Your Retiring Clients Pay Off ...

Trading Center