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 Articles
  1. Retirement

    Assessing the Value of the Roth IRA Conversion

    Learn how the interplay among an intricate web of factors in a Roth IRA determines the strategy’s potential value.
  2. Retirement

    Roth IRA Vs. Traditional IRA

    Learn more about the differences between a Roth IRA and traditional IRA.
  3. Retirement

    Tax Treatment Of Roth IRA Distributions

    Learn the requirements for withdrawing funds tax and penalty free.
  4. Financial Advisor

    Is a Roth IRA Conversion Right for Your Client?

    Here are the factors advisors and their clients need to consider when it comes to Roth IRA conversions.
  5. Retirement

    Why Now Is The Time For A Roth IRA

    Legislative changes in recent years make Roth IRAs worth a second look.
  6. Retirement

    Roth IRAs: Conclusion

    Like the Traditional IRA, Roth IRAs are flexible, and they are a popular way for individuals to save for their retirement. Roth IRAs differ, however, because assets can grow on a tax-free basis. ...
  7. Financial Advisor

    Why Some Advisors are Shy to Convert Roth IRAs

    Potential upcoming changes from the Obama Administration could hit rollovers from traditional to Roth IRAs, and that has advisors reluctant to convert.
  8. Retirement

    Must-Know Rules For Converting A 401(k) To A Roth

    In 2008, the IRS spelled out the details for converting employer-plan funds directly to Roth IRAs.
  9. Financial Advisor

    Is the Roth IRA Under Threat?

    Roth IRAs are one of the most popular retirement savings accounts. Could Congress ever decide that too much money is being sheltered from taxation?
  10. Retirement

    An Introduction to Roth IRAs

    Be sure to consider the tax benefits and the eligibility requirements of the Roth IRA.
RELATED TERMS
  1. Backdoor Roth IRA

    A method that taxpayers can use to place retirement savings in ...
  2. Qualified Distribution

    Distributions made from a Roth IRA that are tax and penalty free. ...
  3. IRS Publication 590: Individual Retirement Arrangements (IRAs)

    A document published by the Internal Revenue Service (IRS) that ...
  4. IRA Plan

    A plan that individuals may establish to arrange and plan for ...
  5. Non-Qualified Distribution

    1) A distribution from a Roth IRA that occurs before the Roth ...
  6. IRA Transfer

    The transfer of funds from an Individual Retirement Account (IRA) ...
Hot Definitions
  1. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  2. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  3. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  4. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  5. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
  6. Underweight

    1. A situation where a portfolio does not hold a sufficient amount of a particular security when compared to the security's ...
Trading Center