A rollover from a 401(k) into a Traditional IRA is allowed and if done properly (funds deposited within 60 days) will be tax free. If you move funds from a 401(k) or Traditional IRA into a Roth IRA, this will be considered to be a Roth Conversion and these funds will be included in your taxable income.
A backdoor Roth is a method to circumvent the income limitations of directly contributing to a Roth IRA. It is done by making a non deductible contribution to a Traditional IRA, then transferring that into the Roth account. By making the non deductible contribution, you establish basis in that Traditional IRA. Then, whenever you transfer it, it is treated for tax purposes, as if you liquidated it, but since it is all a return of basis, it is not taxed.
If you roll over a 401(k) into a traditional IRA, this does not add to any basis established since there is no basis in the 401(k) (it was all pre tax going in). So, make sure to do this into a separate IRA account than the one used for the backdoor Roth.
I hope this helps.
Ryan
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