cancel
Showing results for 
Search instead for 
Did you mean: 
Highlighted
Level 1

How do I account for both a backdoor roth contribution (done in January) and 401k aftertax rollover (done in December) to traditional IRA and roth IRA?

I did a backdoor roth conversion in January 2017 for $5500.  In December 2017 I rolled the aftertax contribution of my work 401k (total amount $16,500) to a roth IRA ($15,000) and a traditional IRA ($1,500). 

I originally received only one 1099-R for the aftertax rollover.  I took the TurboTax advice to split my 1099-R into 2 documents.  One for the Traditional IRA ($1,500) and one for the Roth IRA ($15,000).

Later in the questions, I was asked to state the basis of any Traditional IRA's that were out there (on my form 5498) and I stated the amount that was in my traditional IRA ($1500).

When I look at the actual 8606 form, it shows that I made a non-taxable contribution of only $4000 and a taxable contribution of $1500 when I obviously converted the whole January 2017 contribuiton of $5500 to a roth IRA and there should be not taxes. 

At the end, I should only be liable for taxes on that $1500 in my traditional IRA.

How do I account for all of these inputs correctly?

1 Reply
Level 20

How do I account for both a backdoor roth contribution (done in January) and 401k aftertax rollover (done in December) to traditional IRA and roth IRA?

If your traditional IRA contribution in January 2017 was for 2017, your basis from prior years was zero, not $1,500.

Your rollover of the pre-tax $1,500 from the 401(k) to the traditional IRA in December has caused your Roth conversion to become partially taxable, with only a portion of you basis in nondeductible traditional IRA contributions being applicable to your Roth conversion and the remainder of your basis staying with your traditional IRAs.

With $1,500 of pre-tax money rolled to the traditional IRA before the end for 2017 and assuming no gain or loss, resulting in a year-end balance of $1,500 in the traditional IRA , the nontaxable amount of your Roth conversion calculated on Form 8606 will be:

$5,500 * ($5,500 / ($5,500 + $1,500)) = $4,321

The taxable portion will be:

$5,500 - $4,321 = $1,179

The basis remaining in your traditional IRAs is also $1,179.

If there was any gain or loss resulting in a traditional IRA year-end balance different from $1,500, the calculation will be different.

Had you waited until 2018 to do the rollovers from the 401(k) you would not have created this complication.  As it stands, it would make sense to convert the rest of your traditional IRA in 2018 so as to leave a zero balance in your traditional IRAs at the end of 2018.