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The Brennans have 388,500 in a traditional rollover IRA (all pre-tax) and Michael makes a $7,500 nondeductible contribution for 2026. He intends to immediately convert the 7,500 to a Roth IRA, believing the transaction will be tax-free because the7,500 was after-tax.
What is the actual taxable portion of a $30,000 conversion?
- $26,666.67
- $22,500
- $0
- $3,333.33 in this case
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