How do I enter backdoor to Roth in TT using Pro Rata Rule after I rolled over money from 401K to traditional IRA?

[kata123]

Backdoor Roth was done in June, while rollover was done in July of 2023. No prior money in Traditional IRA prior to 2023.

[RobertB4444]

Backdoor Roth can be a complicated process in TurboTax but they put out a guide for entering it so you're all set.

Here's how to enter a backdoor Roth in TurboTax.

@kata123 

[dmertz · Accepted solution]

The relative timing of the Roth conversion and the 401(k) rollover both in 2023 is irrelevant.  The taxable result on Form 8606 is the same no matter which was done first.  Having a nonzero balance in traditional IRAs makes your Roth conversion largely taxable with only a portion of your basis in nondeductible traditional IRA contributions permitted to be applied to your Roth conversion.  The portion of your basis in nondeductible traditional IRA contributions that is not permitted to be applied to you Roth conversion remains in your traditional IRAs to be applied proportionately to future traditional IRA distributions.

[kata123]

Thanks for your response. I appreciate your detailed explanation. I knew the numbers as I had manually calculated, but it was frustrating not to get additional taxes in TT per pro rata rule. After your suggestion, everything worked, and both numbers, my manual and TT, matched.

One thing that is different this year from past years in TT in backdoor to ROTH steps is, I always selected, “I moved the money to another retirement account .....” to the question “What did you do with the money from ...”. This year, if I were to choose that answer for my spouse, who never had a basis in IRA in prior years or no 401k rollover, TT shows a "Basis carryover as of 12/31/2023" for Traditional IRA for my spouse. If I were to select " did something else with it (cashed ...)", then no basis in Traditional IRA. I had to select the same way, but had a 401k rollover. This is just FYI, and has nothing to do with my original question.