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Level 4

If I make a nondeductible contribution to a trad IRA of $5,500 in 2017 and then convert it to a backdoor Roth IRA, what is the basis of the trad IRA? $5,500 or Zero?

 
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Level 1

If I make a nondeductible contribution to a trad IRA of $5,500 in 2017 and then convert it to a backdoor Roth IRA, what is the basis of the trad IRA? $5,500 or Zero?

Assuming that there are no other non-deductible contributions in the traditional IRA, it now has a cost basis of Zero.

2 Replies
Level 1

If I make a nondeductible contribution to a trad IRA of $5,500 in 2017 and then convert it to a backdoor Roth IRA, what is the basis of the trad IRA? $5,500 or Zero?

Assuming that there are no other non-deductible contributions in the traditional IRA, it now has a cost basis of Zero.

Level 20

If I make a nondeductible contribution to a trad IRA of $5,500 in 2017 and then convert it to a backdoor Roth IRA, what is the basis of the trad IRA? $5,500 or Zero?

Zero -  only if the total 2018 December 31 value of all Traditional, SEP and SIMPLE IRA's that existed are also zero, otherwise the basis must be prorated between the 2018 distribution and remaining value.  As long as any IRA exists the basis can never be zero.