topic Re: Backdoor Roth IRA Completed - Did Pro-Rata Rule Apply? in Retirement tax questions

Backdoor Roth IRA Completed - Did Pro-Rata Rule Apply?

Polaris23 — Tue, 24 Feb 2026 08:29:50 GMT

Background: To date, I've made the following Traditional IRA contributions:

- No Traditional IRA contributions before 2020.

- 2020: $6,000 (fully deductible)

- 2021: $6,000 (non-deductible)

- 2022: $6,000 (non-deductible)

In 2022, I completed a Backdoor Roth IRA of my total Traditional IRA balances, which amounted to roughly $10,000. As you've probably noticed, there was a significant loss in my total Traditional IRA balances at the time I made the Backdoor Roth IRA, which brought down the 3-year cumulative contributions of $18,000 to $10,000 (i.e., loss of $8,000).

Question: Given my total loss of $8,000 was higher than the $6,000 (fully deductible) Traditional IRA contribution made in 2020, I did not pay any taxes on my 2022 Backdoor Roth IRA. Could you please confirm if this makes sense to you, or if there should have been some sort of pro-rata rule calculation made that resulted in a tax liability? Ultimately, I'm trying to understand whether or not I made a mistake and if I need to go back and amend my 2022 return.

Thanks in advance!

Re: Backdoor Roth IRA Completed - Did Pro-Rata Rule Apply?

Anonymous_ — Sat, 21 Dec 2024 21:18:04 GMT

Re: Backdoor Roth IRA Completed - Did Pro-Rata Rule Apply?

dmertz — Sun, 03 Dec 2023 23:42:50 GMT

The Roth conversion was reportable on Form 8606 where the pro-rata calculation results in the entire conversion being nontaxable and the $8,000 of remaining basis (line 14) carrying forward for use in future pro-rata calculations if you make traditional IRA contributions and distributions in 2023 and beyond. Given that you made a contribution for 2022, TurboTax would have left lines 6 through 12 blank and put asterisks on lines 13 and 15 indicating that the pro-rata calculation was done using Worksheet 1-1 from IRS Pub 590-B.

Re: Backdoor Roth IRA Completed - Did Pro-Rata Rule Apply?

Polaris23 — Mon, 04 Dec 2023 00:12:44 GMT

Thank you very much @dmertz , very helpful insight. I understand then that my conversion was filed correctly and that no tax liability should have come out of that.

What confused me a bit is your comment on the "remaining basis" - If we take a step back, given that the $6K contribution in 2020 was (fully deductible), wouldn't the basis left (on row 14) after the 2022 conversion be: $12K (from the 2021 and 2022 non-deductible contributions) - $10K (from the backdoor ROTH IRA conversion) = $2K? Instead of the $8K you mentioned? Apologies if I misunderstood it.

Lastly, I do see the asterisks you mentioned on rows 13 and 15C, but don't see any Worksheets or footnotes, is that normal?

Thank you very much in advance!

Re: Backdoor Roth IRA Completed - Did Pro-Rata Rule Apply?

dmertz — Mon, 04 Dec 2023 01:37:47 GMT

I missed the fact that the 2020 contribution was deductible and that you had only $12,000 of basis, not $18,000. Taking that into account, you have $2,000 of basis that carries forward.