Do previous Backdoor Roth IRA count as past Nondeductible Contributions IRA?

[NotoriousBOG]

I am at the screen where it asks "Any Nondeductible Contributions to <my name>'s IRA?"

My situation:

• In 2020 I did a backdoor conversion (using post-tax money) from a Traditional to a Roth of $5400. The Traditional account was then closed since it was empty).
• In 2021 I did the same thing as in 2020 but for the full $6000. The Traditional was once again closed.
• I have no other Traditional IRAs open at this time.

Do I answer the question "Yes, I made and tracked non-deductible contributions" or do I answer No? If I answer yes, do I enter the $5400 or the sum of both years, i.e. $11,400?

If I answer no, it seems to increase my MAGI and I'm not sure why.

But the more fundamental questions is whether or not previous contributions that have been fully 'backdoored' should be tracked in subsequent years.

Thank you!

I've tried both and it changes my AGI by $3K or

[ThomasM125 · Accepted solution]

The reference to non-deductible IRA contributions refers to contributions to a traditional IRA that were designated to be non-deductible. You should answer "yes" to the question about making and tracking non-deductible IRA contributions, since you did that to consummate the backdoor ROTH IRA.  You need to indicate that your prior year ending traditional IRA basis at December 31, 2020 was $0, since you converted all of your non-deductible contribution to the ROTH IRA, so there was nothing left in your traditional IRA at December 31, 2020.

You don't need to track previous year IRA non-deductible contributions since they are now in the ROTH IRA, so you don't have any basis (non-deductible contributions) to track anymore.  You may need to track the ROTH IRA contributions, however, in the case that you make a premature distribution you would need to know the basis to determine taxable income on earnings.

@NotoriousBOG

[Edited 2/22/2022 at 10:33 AM PST]

[NotoriousBOG]

Thank you @ThomasM125, this is helpful. I'm still puzzled by these seemingly contradictory statements in your answer. I can't square: 

You would enter the current year contribution

with

You don't need to track previous year IRA non-deductible contributions since they are now in the ROTH IRA

So what do I enter in the box "Total Basis as of December 31, 2020" on the "Let's Find Your IRA Basis" Screen?

• 0 because I should not be tracking it anymore
• 5400 because that's what I converted in 2020
• 6000 because that's what I converted in 2021 

Or are you telling me that by always entering the amount converted in the most recent year (in this case 6000) on this screen, and entering $0 for the prior year traditional IRA balance, then I will always get it right and the distribution will not be taxable?

Thanks again!

[JohnB5677]

Yes, You picked up on a key point. 

You should post the full Non-Tax-Differed Basis for all funds placed in the traditional IRA as of the specified date "Total Basis as of December 31, 2020".

You will pay taxes on the ROTH conversion for all of the rollover that was tax-deferred in the traditional IRA.