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Level 1

Yearly I make a non-deductible contribution to Trad IRA & then convert it all to my Roth. I get a 1099R. Do I still have Basis in Traditional IRA's (per TT) or is it $0?

I start out each year with a $0 balance in my Traditional IRA, make a non-deductible contribution to that IRA, put it in cash only, and then later in the same year convert that full amount to a Roth.  Each year I get a 1099R.  After entering this information in TurboTax, it asks my for my total non-deductible contributions I have made in prior years to my Traditional IRA.

Do I have basis in my Traditional IRA, even though the end of year balance is zero each year? And does that number grow each year by the amount of the non-deductible contribution?

In year's past I have been putting $0 as the basis for traditional IRAs and now I think that was a mistake.

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Accepted Solutions
Level 1

Yearly I make a non-deductible contribution to Trad IRA & then convert it all to my Roth. I get a 1099R. Do I still have Basis in Traditional IRA's (per TT) or is it $0?

No - you will not have any basis ($0) in your traditional IRA if every year you convert the entire amount of excess contributions to a Roth IRA. You would only have basis for any nondeductible portion of your IRA that remained your traditional IRA after the conversion. So if you convert the entire amount each year, then you have $0 basis in your traditional IRA.

2 Replies
Level 1

Yearly I make a non-deductible contribution to Trad IRA & then convert it all to my Roth. I get a 1099R. Do I still have Basis in Traditional IRA's (per TT) or is it $0?

No - you will not have any basis ($0) in your traditional IRA if every year you convert the entire amount of excess contributions to a Roth IRA. You would only have basis for any nondeductible portion of your IRA that remained your traditional IRA after the conversion. So if you convert the entire amount each year, then you have $0 basis in your traditional IRA.

Level 1

Yearly I make a non-deductible contribution to Trad IRA & then convert it all to my Roth. I get a 1099R. Do I still have Basis in Traditional IRA's (per TT) or is it $0?

I'm a little confused. Technically, the conversion happened AFTER the current tax year has ended and been submitted because the 1099R doesn't arrive to be claimed until the following year. Meaning, there appears to be basis next year until the 1099R can be properly added to the following years' taxes, yes?

If the basis is to be zero in the following year, that would mean that the conversion would need to be recorded somehow in the current year...without a 1099R. How to do this in TurboTax?