Re: That is the hazard of doing a backdoor Roth if...
Level 15

Retirement tax questions

Unrecoverable basis just means nondeductible contributions that you put in that you'll never be able to get back out because it went to investment losses.  In the past you could potentially take a miscellaneous deduction for unrecoverable basis (which presumably used up the basis) if you had a zero balance in all of your traditional IRAs at year end, but that deduction was eliminated by the Tax Cuts and Jobs act of 2017 and the IRS has not made it clear what happens to your unrecoverable basis now when your year-end balance in traditional IRAs drops to zero.  Maintaining a small balance in a traditional IRA ensures that the basis continues to be carried forward for potential later use rather than just possibly disappearing and producing no benefit.  (My own position on this question is that the basis should continue to carry forward even with a zero balance in traditional IRAs, but I've never seen a ruling to confirm this.)

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