Backdoor Roth issue

Wade020 — Mon, 09 Mar 2026 07:34:07 GMT

I screwed up and had still funds in my traditional IRA. I made a non-deuctible contribution to the IRA and then moved it to Roth. I learned that I now have to pay taxes on part of it because I had already funds in the traditional IRA. And I will have a left over basis because if it in 2021.

I found this https://www.lordabbett.com/en-us/financial-advisor/insights/retirement-planning/when-the-rev[product key removed]--benefits-of-a-reverse-rollover.html

"Basis - Do you have a traditional IRA that contains after-tax dollars (basis)? Usually, when any traditional IRA you own (including SEP and SIMPLE accounts) contains both pre-tax (tax-deductible contribution plus earnings) and after-tax money, a withdrawal (e.g., rollover, Roth conversion, RMD, normal distribution etc.) is partially taxable (referred to as the IRS “pro-rata” rule), and the calculation and tax report is onerous. Learn more herehow to avoid being taxed twice on your retirement savings.

You’re not permitted to do a reverse rollover of after-tax (non-deductible) IRA funds. Instead, only pre-tax IRA funds qualify for reverse rollover treatment. This rule at first glance may seem unfavorable. In reality, it offers the ability to “split” IRA pre-tax and after-tax dollars, which in turn offers a potential tax-free Roth conversion!

EXAMPLE: Ben has a $100,00 traditional IRA of which $30,000 consists of basis (after-tax funds), and the remaining $70,000 is pre-tax. Since a 401(k) can only accept pre-tax funds, the basis can’t be rolled over and must remain in his IRA. After Ben rolls over the $70,000 to his 401(k), what’s left in his IRA ($30,000) is all after-tax dollars, which can now be converted to a Roth IRA, free of taxes. Why? Because taxes had previously been paid on these funds, there is no tax bill for the Roth conversion."

Can I do that like he says in 2022 to move the pre-tax funds to 401k and have the basis left in the IRA? To be able to do backdoor Roth without issues in the future?

@dmertz

@Opus 17

Re: Backdoor Roth issue

dmertz — Sun, 20 Mar 2022 14:19:41 GMT

Yes, if you have a 401(k) that will accept such a rollover, you can roll the pre-tax money over to the 401(k). Only pre-tax money is permitted to be rolled from a traditional IRA to a 401(k), so this would leave the basis in your traditional IRAs. This won't help with any Roth conversion that you did in 2021 but it will help with conversions going forward.

Re: Backdoor Roth issue

fanfare — Sun, 20 Mar 2022 14:32:30 GMT

If your IRA continues to grow (it is supposed to) you will still have a taxable amount on any future Roth conversion.

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