DanaB27
Expert Alumni

Get your taxes done using TurboTax

To clarify, was your value of all your Traditional/SEP/SIMPLE IRAS on December 31, 2024 $0 (step 7)? If not and you had pre-tax fund in your Traditional/SEP/SIMPLE IRAs then the pro-rata rule applies. This means that with each distribution/ conversion you will have a taxable and nontaxable part. You can see the remaining basis on line 14 of Form 8606, this basis can be carried forward. Therefore, each distribution/conversion in the future will have a taxable and nontaxable part until the basis is all used.

The Backdoor Roth only works if your traditional/SEP/SIMPLE IRAs are empty.  If you plan to use this strategy in the future you might want to think about a reverse rollover where you rollover IRA money to a company plan, like a 401(k). Only pre-tax funds can be rolled from an IRA to a company plan. Therefore, you would isolate the basis and could start the Backdoor Roth procedure fresh. But it only works if your employer allows it, not all plans do.

 

@ambatput 
 

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