Conversion of traditional IRA

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Q. I am 68 and plan to retire in two years from a civilian position with a district attorney’s office. I have a traditional IRA in a Vanguard account, which consists of both non-deductible and deductible contributions. I no longer contribute, and the IRS Form 8606 reflects a $99,000 non-deductible basis. I would like to move that portion to my Vanguard Roth IRA and direct transfer the remaining portion to my TSP account, mainly to take advantage of the G Fund. If I move the $99,000 to my Vanguard Roth IRA first and then request Vanguard move the rest to TSP, will I be able to show the IRS in April 2018, that the IRA withdrawal is a tax-free move for the entire $99,000 since it matches the IRS Form 8606 amount, or will it be proportional? (It represents about
a quarter of the total amount of the traditional IRA.)

A. Technically, you are supposed to transfer the pretax amount to your TSP first, and then you may convert the remaining post-tax money to the Roth IRA. You should probably hire a tax accountant to guide you through the process and file your return for that year.

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Mike Miles is a Certified Financial Planner licensee and principal adviser for Variplan LLC, an independent fiduciary in Vienna, Virginia. Email your financial questions to fedexperts@federaltimes.com and view his blog at money.federaltimes.com.

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