Hi,
I have both a backdoor roth conversion ($6k) and a 401k to IRA rollover even in 2021. As a result, the conversion event is subject to pro-rata rule to figure out which part of the $6k is taxable and which part is not. I am unsure whether the portion of post-tax money contributed in 2022 for 2021 can be used in calculating the pro-rata non-taxable basis.
To provide more detail - I have $6k carry over ira basis in my traditional IRA, I contributed $6k to my traditional IRA for 2021 and converted to roth immediately (but the contribution happened in 2022), and rolled over $80k of 401k in 2021 (with a value of $80k at the end of year).
If I follow the form 8606 calculation, my non-taxable portion will be box 5 (which is 6k contribution for 2021 + 6k ira basis - 6k contributed in early 2022 for 2021 = 6k) divided by box 9 (80k end of year value + 6k roth conversion = 86k). The proportion is 6.9%.
However, if I follow worksheet 1-1, the proportion is (ira basis + contribution for 2021) / (end of year ira value + roth conversion), which is equal to 12k/86k = 13.8%.
I am fairly certain that the worksheet 1-1 calculation is correct, since it is published by IRS, and turbotax uses it on the backend too. I am just a little puzzled by this discrepancy. Is form 8606 not supposed to be filled out directly in this case?
