@afromca wrote:
Thanks, apologies for not being clear. My situation is entirely about 2024 only. Converted traditional IRA to Roth IRA as step 1 (so balance was 0 then), then as step 2 executed the backdoor Roth with non-deductible contribution to the traditional IRA. The traditional IRA has 0 balance now. I was wondering if I will be taxed only on step 1 deductible contribution (which was there since 2012-14 timeframe and has grown), or will pro rata apply to me because of step 2. Thanks for your guidance.
A "backdoor Roth" has two steps, first you make a non-deductible contribution to a traditional IRA, then you convert it (roll it over) to a Roth IRA. Are you saying you only performed the first step? Then yes, you must follow the pro-rata rule. The conversion will only be partly taxable (instead of fully taxable) and the remaining balance in your traditional IRA will be partly deductible and partly non-deductible. This will all be reported on form 8606. You will want to convert the remaining funds in 2025, after entering any non-deductible contribution for 2025, so you end 2025 with a zero balance in traditional IRAs.
