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Retirement tax questions
Q. If I enter this correctly in TT, should I expect TT to generate an 8606 Form?
A. Yes.
Q. For the backdoor Roth IRA conversion, I've basically taken the after-tax contributions that I made to my 401K, excluding any appreciation, and moved that into a Roth IRA. I am not expecting this conversion to generate any taxable income. Is that correct?
A. No. You are not allowed to move (convert) only after tax money to a Roth.
General description (not specific to your case but the effect and result are the same)
This year's contribution or rollover cannot be converted in isolation from all existing traditional IRA(s). It's best explained by example. Let's say you have a $95,000 balance in all your existing traditional IRAs and that balance consist of $45,000 in deductible contributions, $10,000 in previous non-deductible contributions and $40,000 in earnings (interest, dividends & capital gains). This year you make a $5000 non-deductible contribution and convert $5000 to a Roth. Only 15% of the $5000 conversion ($750) will be tax free. Your basis, in all your IRAs, is $15,000 (the previous $10,000 of non-deductible contributions plus this year's $5000 contribution). TurboTax will divide that $15,000 basis by the $100,000 balance ($95K+5K) to arrive at the 15% tax free ratio. This is the way the IRS requires it to be done. The calculations will be shown on form 8606.