Pro Rata Rule Tracking in TT

[mikehikes]

Retired and heard of the pro-rata rule recently.  I have $10,000 that I contributed post-tax in my IRA.  I did a $20,000 ROTH conversion in 2024 and my December 31st traditional IRA balance was $500,000.  I understand that a small amount of the conversion money is not taxed (about $400).  It was easy to enter the 1099R in TT but how do I set-up TT to do the pro-rata tracking?  

Side question...to confirm, I pretty much have to track this for the rest of my life as I begin even normal distributions?  

Thank you in advance.

[dmertz]

When you've entered your basis in nondeductible traditional IRA contributions as you have done in this case, TurboTax tracks the basis on TurboTax's IRA Information Worksheet.  TurboTax is transfers in the information from this worksheet when you transfer in your previous year's tax file to begin your tax return.

You'll need to track your basis until you no longer have any funds in traditional IRAs at the end of some year.  At that point, all of the basis will have been distributed.  Keep your Forms 8606 forever to document your basis history.

[mikehikes]

Hi dmertz,

Thank you for the quick reply.  But, that is the question.  I was never asked to enter in my basis information (in this case the $10,000 and $500,000).  Where/how do I do that?

Thanks for confirming that I will be tracking the basis for some years to come. 

[dmertz · Accepted solution]

If you've been using TurboTax throughout, each time you entered a nondeductible traditional IRA contribution , TurboTax would have prepared Form 8606 Part I to report that contribution and TurboTax would have carried  to the IRA Information  the result on line 14 of that form to be added to the basis from prior years already on that worksheet.  After entering a traditional IRA contribution or entering a Form 1099-R that reports a traditional IRA distribution, TurboTax will present the question that asks if you made any nondeductible contributions for prior years and, if you answer Yes, will ask you to enter or confirm your basis.

[mikehikes]

Thank you !  I never saw this my first time so I figured I did something wrong.  Reset TT and started again and this time all came out well.