Hello,
I do back door conversion each year and convert the maximum amount allowed based on the tax year from a Traditional IRA to a Roth IRA. This effectively always leave the amount in my Traditional IRA to $0 with the amount in my Roth IRA increasing accordingly each year.
Now I am planning that after I retire in a few year to consolidated several 401k accounts by rolling the amount in the Traditional IRA account (I only have one Traditional IRA account). How is the tax on the withdrawal calculated? Let's as take an example:
My Roth IRA has accumulated $100k via the back-door conversion from Traditional IRA to Roth IRA through out the years. My Traditional IRA now has $0. However, I believe the basis on the Traditional IRA is $100k even though there are actually $0 in it. Please confirm this part for me.
Next I consolidate all my 401k accounts together with a total of let say another $100k and then rolled this amount to my Traditional IRA. So we have so far $100k in the Roth and 100k in the Traditional.
When I decide to withdraw let say 10k from the Traditional during my retire years, how are the tax calculate? I believe I calculate like this: 50% X 10k = 5k. Only 5k will be taxed. The 50% is because of the basis (100k) divided by the total 200k. Please let me know if this correct.
thank you !
