`backdoor conversion prorata rule for 2020 tax filing

[deeppeer123]

Hello all,

I would kindly like the advice.

as of now, 1/5/2021

I have traditional IRA amount of 60000 (pretax dollars), this amount was rolled over from previous 401K, this was rolled over in 2018, then there is no additional contribution since. 

Now I have 401k active with current company. 

I am planning to do backdoor roth conversion for year 2020

If I roll 60,000 to 401k now (1/5/2021), and then adding post tax dollar to nondeductable IRA then convert this amount of 6000 to roth.  The deadline for IRA contribution is 4/2021 for year of 2020. 

Will this 6000 be taxed by prorata rule when it is converted to ROTH from nondeductable IRA. 

Welcome any advice, and thought, I really appreciate it. 

Regards, 

PD

[macuser_22]

Yes the $6,000 non-deductible basis, if that is the only money in all Traditional IRA accounts that exist at the end of 2021 (Dec 31, 2021), will offset the tax on the 2021 conversion.     You can also make a 2021 non-deductible $6,000 contribution and convert the entire $12,000.     That will go on your 2021 tax return in when you file in 2022.

(If you were thinking that this could be reported on your 2020 tax return then sorry, any 2020 conversion must have been completed by Dec 31, 2020.  If after that and in 2021 then it is reported on your 2021 tax return.) 

The 2020 non-deducible contribution IS reported on your 2020 tax return on a 8606 form which you will need when you do your 2021 tax return for the conversion.