I made a non-deductible contribution (2017 tax year) to a IRA in Mar 2018 and converted to ROTH IRA shortly after. Can I make a 2018 contribution and convert in 2018?

[mckinnch]

Additionally, I made this 2017 non-deductible contribution after I filed and had my taxes accepted. Do I need to amend my returns to reflect the contribution? If so, do I also need to reflect the conversion? Or is that only reflected for 2018 taxes since the conversion took place in March 2018? Thank you!

[dmertz · Accepted solution]

Yes.  Your nondeductible contribution for 2017 is reportable on your 2017 tax return which should have included Form 8606 showing this addition to your basis in nondeductible traditional IRA contributions.  Since you did not already report the traditional IRA contribution, you should be able to file Form 8606 separately showing this addition to your basis.  You can use TurboTax to amend your 2017 tax return and prepare the Form 8606.

The contribution for 2018 and the two Roth conversions will be reportable on your 2018 tax return.  You'll want to begin your 2018 tax return by transferring in from your amended 2017 tax file so that TurboTax pick up your basis carried over from 2017.

[mckinnch]

Thank you dmertz, very helpful. And to confirm, there is nothing wrong with contributing another $5,500 (non-deductible) for 2018 and converting in calendar year 2018 (i.e. converting my both of my 2017 and 2018 contributions of $5,500 in calendar year 2018)?

Assume that it would be permissible, and that I would just need to note the $5,500 starting basis in my traditional IRAs for 2018 Form 8606. That way would be 2018 contribution of $5,500 + $5,500 basis - $11,000 conversion (assuming no gains / losses before conversion) which would get me back to a $0 basis in traditional IRAs for 2018 per the Form 8606 worksheet.

Thanks again for your quick response. It is much appreciated.

[dmertz]

Correct, nothing wrong with contributing for 2018 now and converting to Roth immediately thereafter.  There is no limit to the number of Roth conversions that you can do in a given year.  Keep in mind that Roth conversion performed in 2018 and later cannot be recharacterized back to a traditional IRA.

Correct regarding the basis.  On your 2018 Form 8606, line 1 will have $5,500 and line 2 will have $5,500, so line 3 will have $11,000.  As long as you don't do any rollovers from employer 401(k), 403(b) or 457(b) plans that would cause you to have a nonzero balance in traditional IRAs on December 31, 2018, your entire $11,000 of basis will be applied to your Roth conversions.