@techie353 wrote:
I have contributed $6k to the traditional IRA and plan on doing the $12k conversion to Roth IRA. Is this a conversion (the Backdoor Roth) of all $12k and its earnings, everything in the traditional IRA account? Do you know? Thanks in advance!
If you have a deductible balance in any traditional IRA, you can't really do a "backdoor" Roth conversion. The best way to explain is by example. Suppose you have traditional IRAs with a a balance of $60,000 and you make a $6000 non-deductible contribution. (All your IRA balances are aggregated for this calculation, it does not help you if you put the non-deductible money in a different account.)
If you then convert $12000 to Roth, your non-deductible balance is pro-rated. In my example, you have a $6000 non-deductible basis which is 9% of the total, so only 9% of the conversion amount is non-taxable ($1,090) and the other $10,910 is a taxable Roth conversion. Out of that $6,000 non-deductible contribution, $4910 remains in the traditional IRA.
If you made a $6000 non-deductible traditional IRA contribution, the only way to do a "backdoor Roth conversion" is to convert the entire balance of all your traditional IRAs to Roth, and pay income tax on the deductible portion of the IRA.
Then in the future, a backdoor Roth IRA would be making a non-deductible traditional IRA contribution, then converting the entire amount to a Roth IRA. That way, the process is non-taxable. But a backdoor Roth doesn't really work if your traditional IRA balances are mixed of deductible and non-deductible contributions.
