DanaB27
Expert Alumni

Get your taxes done using TurboTax

Please, be aware that the backdoor Roth technique only works if your traditional/SEP/SIMPLE IRAs are empty. If you have any pre-tax funds in the traditional/SEP/SIMPLE IRAs then the pro-rata rule applies and each distribution/conversion 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.

 

 If you plan to use the backdoor Roth 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.

 

@kenchadetta

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