IRA to 401k Transfer Question

[mw104]

I am currently considering doing a Traditional IRA to Traditional 401(k) conversion in order to be able to make “backdoor” Roth IRA contributions in the future, and I wanted to better understand the tax implications and nuances associated with it beforehand.  My existing Traditional IRA contains a combination of deductible and non-deductible contributions, all in one account.  My goal would be to move all of the deductible contributions to my Traditional 401(k).  Then, I would move the non-deductible contributions to my Roth IRA (via the “backdoor” method).  Future non-deductible contributions would also be transferred to my Roth IRA via the “backdoor” method.  My goal is to avoid paying excessive taxes on my transfers.

My questions are:

• Is my plan the best way to approach this, or is there a better method?
• When making an IRA to 401(k) transfer, is it possible to only transfer the deductible contributions, since the IRA custodian would not be aware of how my money is divided?  The amount of non-deductible contributions is only tracked on the IRS Form 8606, to my knowledge.
• How is this all tracked for taxes?  Would the IRA custodian provide a 1099-R form for the rollover, or is it tracked some other way?  Does TurboTax have the ability to handle this type of transfer, since it seems to be fairly rare from my understanding?

[Critter-3]

 My goal would be to move all of the deductible contributions to my Traditional 401(k).  First this cannot be done as the non ded & ded contributions cannot be separated like you want legally   and  unless the IRA was a roll over from a prior 401K   AND  the new 401K allows the roll over  AND  the IRA was not poluted with any other contributions  then  you cannot do this at all.  

[mw104]

Thank you for the response.  So, what would be the process that I should follow to transfer an IRA with mixed deductible and non-deductible contributions back to a 401k?  Is it not possible?  It sounds like it may be more of a headache than is worthwhile.

To answer your questions, the new 401k does allow for roll-overs and the Traditional IRA was not polluted with other contributions, but the IRA was not a rollover from a prior 401k.

[dmertz · Accepted solution]

Critter-3's reply is incorrect.  The requirement that the funds rolled over to a 401(k) be from a so-called "conduit IRA" was eliminated more than 15 years ago.

@mw104 , what you propose is permitted and is the only way this can be accomplished.  You'll need to determine the amount of pre-tax money to be rolled over by subtracting the amount of the basis in nondeductible traditional IRA contributions and request that that amount be rolled over to the 401(k); as you indicated, the IRA custodian has no way to do this calculation themselves.  Although such a rollover is usually done as a direct rollover with the IRA custodian paying the funds directly to the 401(k) plan for your benefit, best done by specifically identifying the particular 401(k) account into which the funds are to be deposited, but the rollover can also be done indirectly.  Be aware, though, the the 401(k) plan is not required to accept rollovers from IRAs, so be sure to check with the plan before attempting any such rollover.

If you do a direct rollover, for that you'll receive a code-G Form 1099-R wit the IRA/SEP/SIMPLE box marked separate from the Form 1099-R for the distribution that is converted to Roth.  If done indirectly both distributions will be on the same Form 1099-R and you'll need to split the form into two for entry into TurboTax because TurboTax cannot handle entry of a single Form 1099-R that shows both of these transactions.  TurboTax automatically excludes the rollover over from the amount reported on line 7 of Form 8606.