Non-Deductible IRA
Is it possible to roll over the non-basis portion of a non-deductible IRA into an employer plan so that you are just left with after tax contribution amounts in the IRA?
I would like to do a Roth Conversion but the pro-rata rule is holding me back. I have a qualified plan that I could roll over the funds but I am not sure if you can distinguish between basis and earnings when you do the rollover to the corporate plan.
Any help is appreciated.
Permalink Submitted by Alan - IRA critic on Thu, 2016-09-15 21:34
Yes, you can roll over the pre tax portion of your IRAs. If you have more than one IRA account, your basis floats over all of them, and you would roll over the total value of your non Roth IRAs less your basis. There is a special rule that states that the first dollars rolled into the employer plan are the pre tax dollars of the IRA. In fact, the employer plan cannot legally accept basis into the plan. Therefore, pro rating does NOT apply to that rollover.You can convert your basis to a Roth IRA either before or after the rollover, but is there is any doubt about your plan accepting an IRA rollover from an IRA that is not a rollover IRA, better do the rollover to the plan before the conversion.