Ms. Sturm owns a tax-deferred retirement account with a $200,000 current balance. She in-tends to roll over this balance into a new Roth IRA before the end of the year. Ms. Sturm’s current marginal tax rate is 35 percent. Compute Ms. Sturm’s tax cost of converting her existing retirement account to a Roth IRA and the after-tax rollover if:
a. The existing account is a Section 401(k) plan funded by Ms. Sturm’s elective contributions and her employer’s matching contributions.
b. The existing account is a traditional IRA to which Ms. Sturm made $38,400 of nondeductible contributions.

  • CreatedNovember 03, 2015
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