Question

if in a discussion of the conversion steps and outcomes with an individual who is converting a traditional IRA to a Roth IRA which is (are) true?

I.    Such conversions can be done with no income tax consequences.

II. Qualified distributions from a Roth IRA after a conversion are received tax-free.

.

I only

2.II only

3.both I and II

4.neither I nor II

Answer 1

Answer: 2 - II only - Qualified distributions from Roth IRA after conversion are received tax free.

When you convert from a Traditional IRA to a Roth IRA, a process also known as creating a “backdoor” Roth IRA, you generally pay income tax on the contributions. The taxable amount that is converted is added to your income taxes and your regular income rate is applied to your total income. If the amount is large enough, it may raise your tax bracket for the year in which you do the conversion.

Note that if the money in your Traditional IRA is post-tax money (you did not take a deduction on the money you contributed), you may not owe tax when you convert to a Roth IRA.

Qualified distributions from Roth IRA after conversion are received tax-free