backdoor Roth when owner has bene IRA
new Bene IRA in place, taking annual distributions. No other IRA’s/SEP/etc. Are the backdoor roth’s now compromised? Would client have to pay pro rata taxes on non-ded IRA conversions to roth?
new Bene IRA in place, taking annual distributions. No other IRA’s/SEP/etc. Are the backdoor roth’s now compromised? Would client have to pay pro rata taxes on non-ded IRA conversions to roth?
Permalink Submitted by Alan - IRA critic on Tue, 2023-08-15 19:45
The backdoor process is intact. Inherited IRAs balances are not shown on Form 8606 with those of owned IRA accounts, and therefore do not affect the calculation of conversion taxable amounts.
Permalink Submitted by bobbi bonger on Wed, 2023-08-16 14:19
i made $6,000 backdoor Roth in 2022 ( no other pre-tax IRA accounts) AND did initial 2022 SEP-IRA contribution (funded in 2023 by my filing due date). Since i had zero $ in IRAs as of 12/31/2022 and zero in my SEP-IRA as of 12/31/22 is all my $6,000 Roth conversion tax free ? I know i need to complete Form 8606.- how to show?Thxs
Permalink Submitted by Alan - IRA critic on Wed, 2023-08-16 14:52
Yes, it is tax free because line 6 of Form 8606 will be 0. On Form 8606 enter your 6000 non deductible contribution on lines 1,3, and 5. Line 6 is 0; lines 8 and 9 is the amount of your conversion to Roth. Do the math for lines 10 and 11. Line 12 is 0. Line 13 is the same as line 11. Do the math for line 14. Then complete the 3 lines in Part II of the form. Your taxable amount should be 0.