I am currently considering doing a Traditional IRA to Traditional 401(k) conversion in order to be able to make “backdoor” Roth IRA contributions in the future, and I wanted to better understand the tax implications and nuances associated with it beforehand. My existing Traditional IRA contains a combination of deductible and non-deductible contributions, all in one account. My goal would be to move all of the deductible contributions to my Traditional 401(k). Then, I would move the non-deductible contributions to my Roth IRA (via the “backdoor” method). Future non-deductible contributions would also be transferred to my Roth IRA via the “backdoor” method. My goal is to avoid paying excessive taxes on my transfers.
My questions are:
- Is my plan the best way to approach this, or is there a better method?
- When making an IRA to 401(k) transfer, is it possible to only transfer the deductible contributions, since the IRA custodian would not be aware of how my money is divided? The amount of non-deductible contributions is only tracked on the IRS Form 8606, to my knowledge.
- How is this all tracked for taxes? Would the IRA custodian provide a 1099-R form for the rollover, or is it tracked some other way? Does TurboTax have the ability to handle this type of transfer, since it seems to be fairly rare from my understanding?
