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New Member
posted Mar 16, 2025 3:59:40 PM

Backdoor Roth taxed? Non-deductible contributions to Traditional and backdoored. Basis entered. No distributions received. Roth taxed once enter total value of IRAs.

Traditional and SEP have pre-tax contributions in them. Basis tracked for non-deductible. Turbotax taxing almost entire backdoor Roth as if it was a distribution.

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2 Replies
Level 15
Mar 16, 2025 5:01:35 PM

"No distributions received."

In that case there is nothing to be taxed.

@jandjunified 

Expert Alumni
Mar 17, 2025 6:44:36 AM

Yes, if you have pre-tax funds in one of your Traditional/SEP/SIMPLE IRAs on December 31, 2024, then the the pro-rata rule applies. This means that with each distribution/ conversion you will have a taxable and nontaxable part.

 

The Backdoor Roth only works if your traditional/SEP/SIMPLE IRAs are empty.  If you plan to use this strategy in the future you might want to think about a reverse rollover where you rollover IRA money to a company plan, like a 401(k). Only pre-tax funds can be rolled from an IRA to a company plan. Therefore, you would isolate the basis and could start the Backdoor Roth procedure fresh. But it only works if your employer allows it, not all plans do.

 

@jandjunified