For some reason I can't match the numbers for taxable account in the table. Here are what I got using the same assumptions.
year 1 investment in taxable 7200
capital growth @ 6% = 432
dividend @ 2% = 144
tax on dividend @ 15% = 21.60
reinvest dividend/increase in basis = 144 - 21.6 = 122.40
value at year 2 = 7200 + 432 + 122.40 = 7754.40
basis at year 2 = 7200 + 122.40 = 7322.40
Tfb 00:06, 23 August 2008 (UTC)

I've confirmed that. Let me fix the numbers. Thanks for pointing out the problem. PiperWarrior 01:21, 23 August 2008 (UTC)

I see the page has 2009 phaseout numbers already. What else needs updating? Can we remove the UpdateNeeded tag? Tfb 13:49, 20 July 2009 (UTC)

A couple of points:
1. Does the 2010 change in income limits for Roth conversions need expansion?
2. The section == I have a large Traditional IRA with deductible contributions and/or rollover contributions from an old 401(k). Should I make non-deductible contributions to a Traditional IRA? ==

May need revision. Current Version:

Notice that you cannot just convert the non-deductible part to a Roth IRA.

There are a couple of ways to work around this problem.

• Rollover your Rollover IRA back to a 401(k). You may not want to do this if your 401(k) does not have low-cost options.
• Rollover your Rollover IRA to a solo 401(k). Fidelity, Vanguard, and T. Rowe Price offer solo 401(k) plans to self-employed individuals.

If you do either one of these, the balance in your non-Roth IRA significantly drops. In turn, the amount of non-deductible contributions as a percentage of your non-Roth IRA goes up, possibly quite steeply. Since you do not have to pay tax on the non-deductible portion when you do a Roth conversion, the conversion becomes very easy from a tax standpoint. Specifically, the conversion amount consists mostly of non-deductible contributions, so you do not have to pay a lot of tax.

According to Natalie Choate's authoritative Life and Death Planning for Retirement Benefit,6th Edition, pp. 115-116. ISBN 0-9649440-7-3:
"..the proportionate allocation rule does not apply to rollovers from an IRA to a QRP (Qualified Retirement Plan] or 403(b) plan. Instead, a distribution that is rolled from and IRA to a QRP or 403(b) plan is deemed to come entirely out of the taxable portion of the IRA. This exception is necessary because the nontaxable portion of an IRA cannot be rolled into a QRP or 403(b) plan.
Example: Mr Gibbs has a non-traditional IRA that has a value of \$30,000 and a \$12,000 basis of after tax contributions. He also has a traditional IRA valued at \$210,000 consisting of a rollover from a QRP plus some deductible IRA contributions. If he withdraws the \$30,000 from his non-traditional IRA he must prorate the basis across his aggregate IRA balances. Thus, \$12,000/\$240,000 x \$30,000 = \$1,500. Thus \$28,500 of the withdrawal would be taxable and the basis in the non-traditional IRA would now be \$10,500.
Alternately, if Mr. Gibbs participates in a QRP that accepts rollovers, Mr.Gibbs could rollover, from his two IRAs to the QRP, every dollar above his \$12,000 basis. He is left with one IRA containing \$12,000 of after tax money. He can either withdraw the \$12,000 tax free, or convert it to a Roth IRA. --Blbarnitz 16:23, 20 July 2009 (UTC)