If you would rather lock in your current income tax rate on your traditional IRA than pay the whatever the tax rate turns out to be when you take distributions in retirement, consider converting your account to a Roth IRA. Occasionally, people do not deduct their traditional IRA contributions. If your traditional IRA contains nondeductible contributions, you first have to calculate the taxable portion of your conversion before you can calculate the income taxes on your conversion. However, if your traditional IRA contains no income taxes, your entire conversion is taxable.

Subtract the value of the nondeductible contributions in your traditional IRA account, if any, from the total traditional IRA value to figure the taxable portion of your traditional IRA account. For example, if you have $8,000 of nondeductible contributions in your traditional IRA and the total value equals $20,000, subtract $8,000 from $20,000 to get a taxable portion of $12,000.

Divide the taxable portion by the total IRA value to find the taxable percent of your conversion. In this example, divide $12,000 by $20,000 to get 0.6.

Multiply the result by your conversion amount to find the taxable portion of the distribution. In this example, if you convert $9,000, multiply $9,000 by 0.6 to find that $5,400 of your conversion is taxable.

Multiply the taxable portion of your distribution by your expected income tax bracket. In this example, if you expect to fall in the 26 percent tax bracket, multiply $5,400 by 0.26 to figure your taxes on the conversion to be $1,404.

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