Pro rata

Forum|Forum|1 year ago
January 27, 2025
3 replies
4 views

I want to do a Roth conversion with my traditional IRA, but that means backtracking to make sure none of my contributions were deductible. Trouble is, I'm not sure how to tell.

2016-2020, I had a TSP but I'm not sure whether the contributions were nondeductible. Looking at my tax returns from those years, "IRA deductions" line is blank. There's a form 8880 (tax savers)- line 12 is blank as well so it seems I wasn't able to take the tax credit. So far, nondeductible it seems.

2020, I set up a traditional IRA and transferred the money from TSP into it. I didnt make any contributions to it until 2022.

2022, I put in $1000. Tax return line for "IRA deductions" is blank.

Is it safe to assume that all my contributions so far, from TSP fund transfer, to the $1k in 2022 have been nondeductible? I won't trigger a pro rata? What's a surefire way to check the TSP contributions?

fanfare

Level 15

" What's a surefire way to check the TSP contributions?"

"I want to do a Roth conversion with my traditional IRA"

TSP contributions are not relevant when considering this scenario.

@julia-vu-ucsf

KeshaH

Level 11

Based on the information provided, only your direct contribution to the IRA in 2022 would be nondeductible.

Contributions to a Thrift Savings Plan (TSP) are generally deductible contributions. However, you wouldn't see them on your tax return as a separate deduction because these contributions are generally made through your employer and are deducted from your gross income on your W-2.

When you rolled the money in the TSP over to a traditional IRA, you didn't pay tax on it so the amount rolled over would not be considered nondeductible. However, the $1,000 that you contributed directly to the traditional IRA and didn't take a deduction for would be a nondeductible contribution.

Opus 17

Level 15

A TSP is pre-tax, is not a Roth. If you rolled over your TSP account into a privately owned IRA, that is all pre-tax at this point.

For 2022, if you contributed $1000 to the IRA, you either took a tax deduction or you didn't. If you did not take a tax deduction, then you should have a form 8606 with your 2022 return that documents that you now have a $1000 after-tax basis in the IRA. That form 8606 is what you use to calculate the pro-rata tax on the conversion, and you will also get a new form 8606 when you file your 2025 return (because any conversion now will be in 2025) that will document the calculation, and show the remaining amount of the after-tax basis (if you don't convert the entire IRA all at once).

If you think you did not take a tax deduction for the $1000 contribution but you don't have a form 8606 with your 2022 tax return, you need to file an amended return that either takes the tax deduction or reports the non-deductible contribution on form 8606.