topic Backdoor Roth advice in Deductions & credits

Backdoor Roth advice

ragnarlothbrok — Tue, 24 Feb 2026 04:10:22 GMT

Hello,

I currently contribute $6000/year to my traditional IRA from my post-tax paycheck.

I don't get any tax deduction because my wife is covered by a retirement plan at work, and we make over $129K. Hence, basically all my money in traditional IRA is "taxed" already.

Now, I want to do a backdoor Roth conversion. Many blogs say that if I do the conversion, then I have to pay taxes on the amount I convert, but it doesn't make sense in my case.

What to do about this?

Re: Backdoor Roth advice

Critter-3 — Wed, 19 Apr 2023 23:56:40 GMT

Every year you have made non deductible contributions a form 8606 to document the non deductible contribution so when you convert to the ROTH you don't need to pay taxes again on the same money... you will have to pay taxes on the earnings the IRA have made thru the years that are converted and NO you cannot only convert the prior year non deductible contributions only. Read the form 8606 instructions.

Re: Backdoor Roth advice

Hal_Al — Thu, 20 Apr 2023 10:24:25 GMT

The non-deductible contributions cannot be converted in isolation from any other existing traditional and rollover IRA(s). It's best explained by example. Let's say you have a $10,000 balance in all your existing traditional IRAs and that balance consist of $3,000 in deductible contributions, $2,000 in previous non-deductible contributions and $5,000 in earnings (interest, dividends & capital gains). Your basis, in all your IRAs, is $2,000. This year you convert $5000 to a Roth. Only 20% of the $5000 conversion ($1000) will be tax free . TurboTax will divide that $2,000 basis by the $10,000 balance to arrive at the 20% tax free ratio. $4,000 of the conversion will be taxable.

Re: Backdoor Roth advice

fanfare — Thu, 20 Apr 2023 10:40:03 GMT

Is your IRA growing in value to exceed your prior years basis?

If yes, that's good, but for a conversion the earnings and the basis will always be included in a prorated manner.

It's still a good idea to convert Traditional IRA to Roth IRA as much as possible.

Your retired self will definitely thank you.

@ragnarlothbrok

Re: Backdoor Roth advice

ragnarlothbrok — Thu, 20 Apr 2023 21:22:23 GMT

Thank you everyone.

I have about $20,000 in my traditional IRA as uninvested cash (don't ask me why haha).

Anyway, I would like to just convert that $20K to the Roth IRA.

As I said before, all the money in my traditional IRA is from after-tax money and I never got any tax deduction from this.
Do I need to withhold tax for that $20K that I wish to convert?

Re: Backdoor Roth advice

Hal_Al — Fri, 21 Apr 2023 00:26:42 GMT

Q. Do I need to withhold tax for that $20K that I wish to convert?

A. No. The taxable amount will be small (the interest on the cash).

You don't save any tax by limiting your conversion amount to the $20K you put in. You can convert the whole account with no, or close to no, difference in the tax due.