Roth IRA back door contribution while having more than one traditional IRA account

[rk38]

Looking for guidance on a back door roth contribution from one traditional IRA account while holding another/second traditional IRA account with a balance. 

If you have a second traditional IRA acount with a balance and do a back door roth contribution conversion from another traditional IRA account which ends up at $0 after the back door roth conversion, and later in the same tax year fully convert that second traditional IRA that had a balance to the roth IRA, will you still  end up paying double tax on the attempted back door roth contribution conversion?

[fanfare]

Regardless of the number of Traditional accounts, IRS says you have one Traditional IRA with one "prior years basis" and you must report it that way.

@rk38 

[rk38]

So since it is considered 1 traditional IRA, will the back door roth contribuition be taxed twice then, even though all traditional IRAs were fully converted to a $0 balance in the same tax year?

[fanfare]

Generally speaking , you are not taxed twice aka double taxed.

If you convert N dollars two times,  you will pay income tax on a conversion of 2 x N dollars.

@rk38 

[rk38]

So if the back door roth contribution was made with after tax dollars should the tax form 8606 limit double taxation, even though there was additional funds in the traditional IRA from a 401k rollover?

[fanfare]

You have to study Form 8606 to understand how the non-taxable part of a conversion to Roth is calculated.

@rk38 

[fanfare]

Generally if you did a rollover of a 401k in the same year, that messes up the tax-free nature of a backdoor Roth IRA  contribution.

@rk38 

[rk38]

The roll over was done some time in the distant past and the traditional IRA was left alone until the tax year of the back door roth at which point the roll over IRA was shortly after fully roth converted.  So, will that still create a double tax on that back door roth attempt?

[fanfare]

If you convert N dollars from one account and M dollars from a second account,  you will have a conversion of  N+M dollars.

The non-taxable part, if any, depends on how much of your IRA has been designated as non-deductible.

See Form 8606 Lines 1,2.

@rk38