- You are not permitted to roll the entire $74,000 over to the 401(k) because part of it is basis in nondeductible traditional IRA contributions. Only the pre-tax portion of your traditional IRA is permitted to be rolled over to a 401(k). The basis portion must remain in your traditional IRAs, which you can then convert to Roth.
- The pro rata rule always applies when you have basis in nondeductible traditional IRA contributions, but with 100% of your traditional IRAs consisting of basis in nondeductible traditional IRA contributions, the pro rata calculation on Form 8606 results in Roth conversions being 100% nontaxable.
- The calculation relies on the total year-end value in your traditional IRAs. If that value is zero, all of your basis in nondeductible traditional IRA contributions will be applied to the Roth conversion(s) (assuming that your Roth conversions total at least as much as your basis).
- Amounts reported with code G in box 7 and the IRA/SEP/SIMPLE box marked are never taxable because the rollover can only be to the traditional account in the 401(k).
