Non-deductible contributions in Traditional IRA

Submitted by Mark Smogor on Sat, 2019-08-03 13:10

I know I can transfer my after tax contributions in my 401k into a ROTH IRA at the time I do the rollover. My question is can I take the after tax contributions out of my Traditional IRA all at once and put them into a ROTH IRA. I have filed the 8606 form each year and I know how much I have in after tax contributions.
I am also aware of the pro-rata distribution rules when there is after tax contributions in the Traditional IRA, but I would like to do the ROTH transfer if it is allowed. Any help is appreciated.
Thank you.



Submitted by David Mertz on Sat, 2019-08-03 14:37

  • A Roth conversion is deemed to be a distribution from the traditional IRA and a taxable rollover to the Roth IRA.  As a distribution from the traditional IRA includible on Form 8606, it’s subject to the pro rata calculation to determine the taxable amount of the conversion.  This is different from a rollover to a Roth IRA from a 401(k) because distributions from a 401(k) do not involve Form 8606.  Also, to roll just the after-tax money from a 401(k) over to a Roth IRA, any pre-tax money distributed from the 401(k) as part of the same distribution would have to be simultaneously rolled over to a traditional IRA or traditional account in a qualified retirement plan; rollovers of distributions from qualified retirement plans consist first of the taxable portion of the distribution.  With the taxable portion of the 401(k) distribution rolled over to a traditional account, the remainder, the after-tax portion, is left to roll over to a Roth IRA nontaxably.
  • The only way to accomplish a Roth conversion of just the after-tax basis in your traditional IRAs is to eliminate all of the pre-tax money in your traditional IRAs, usually done by rolling all of the taxable money in your traditional IRAs over to a qualified retirement plan like a 401(k), but, less commonly, it’s also possible to eliminate the taxable portion by making a Qualified Charitable Distribution or an HSA Funding Distribution since these also only come from the taxable portion of the traditional IRAs; these types of transactions are not included on Form 8606.  Rollovers from a traditional IRA to a qualified retirement plan consist only of taxable money since these plans are not permitted to receive rollovers of after-tax basis from traditional IRAs.  That would leave just the after-tax basis in your traditional IRAs to be converted to Roth nontaxably.

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