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...
"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
