topic Non deductible contribution to tIRA, then rolled it over to Roth IRA. In the same year, later rolled over from a previous employer's 401K to the same tIRA. Taxable? in Retirement tax questions

Non deductible contribution to tIRA, then rolled it over to Roth IRA. In the same year, later rolled over from a previous employer's 401K to the same tIRA. Taxable?

vyyn360 — Thu, 06 Jun 2019 10:12:00 GMT

I made a non deductible contribution of 5500 to traditional IRA and then rolled it over to Roth IRA in 2016. In the same year, later I rolled over about 2200 from a previous employer's 401K to the same traditional IRA account. After filling up all the details in TurboTax desktop, the line 15b in 1040 shows taxable amount of $1600. Line 16b shows $0. Would this be accurate?

After reading various answers it seems when I rolled over from traditional IRA to Roth, it presumable rolled over partial (& proportional) rolled over 401K amount which in turn became taxable. Is that correct assumption?

If above is correct, that'd mean tax has been paid on some of the amount held in traditional IRA ($1600 to be precise). Is that accurate too? Do I need to show it on the tax return?

Thanks!

Yes, the rollover of, say, $2,256 from the 401(k) has inc...

dmertz — Thu, 06 Jun 2019 10:12:01 GMT

Yes, the rollover of, say, $2,256 from the 401(k) has increased your traditional IRA year-end balance to make your Roth conversion partially taxable. The expected nontaxable amount would be 5500 * 5500 / (5500 + 2256) = 3900, making $1600 taxable. $1600 of basis remains with your traditional IRAs.

It probably would have made sense just to roll the 401(k) distribution to a Roth IRA instead. It would have cost you only an additional $656 of taxable income or so for 2016. It probably makes sense to do the conversion of this now in 2017, rather than continue to carry $1600 of basis.

Thank you so much @dmertz ! If I roll this $2,256 over t...

vyyn360 — Thu, 06 Jun 2019 10:12:03 GMT

Thank you so much @dmertz !

If I roll this $2,256 over to Roth now before filing the return, would it count towards 2016 return? Either way do I need to fill any additional form with the return?

Thanks once again!

A Roth conversion done in 2017 is reportable on your 2017...

dmertz — Thu, 06 Jun 2019 10:12:04 GMT

A Roth conversion done in 2017 is reportable on your 2017 tax return, not your 2016 tax return. It has no effect on your 2016 tax return at all.

Thank you @dmertz

vyyn360 — Thu, 06 Jun 2019 10:12:05 GMT

Thank you @dmertz