DanaB27
Expert Alumni

Retirement tax questions

Yes, when TurboTax asks about the value on December 31, 2022, you have the enter the total value of all of your traditional/SEP/SIMPLE IRAs (it would include the amount you had rolled over into your IRA in the past). But you do not add the value that is still in a 401(k) account with your current employer.

 

Yes, since you had pre-tax funds from your 401k rollover into your traditional IRA now 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. 

 

If you plan to convert more funds to the Roth IRA 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.

 

Please see How to FIX Backdoor Roth IRA Screw-ups and When the Reverse Makes Sense: Benefits of a Reverse Rollover for additional information.

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