roth conversion
Tax payer is eligible for a back door Roth conversion.
tax payer makes a post tax contribution to the TIRA and converts the next day to a Roth. Transaction is completed on 6/25/17. Later in the year, rolls a 401k consisting of all pre tax money to a TIRA.
Will the IRS require any part of the new TIRA to be taxed under pro rata rules? is having an IRA with pre tax dollars tracked by 12/31 or by the date of the conversion?
Permalink Submitted by Alan - IRA critic on Mon, 2017-06-19 20:28
The taxable amount of the conversion will be determined by the year end adjusted total of all non Roth IRAs. Therefore, the 401k rollover will cause the conversion to be nearly 100% taxable unless the rollover was very small. The exact taxable amount is determined on Form 8606. If taxpayer does not want to pay the conversion tax, they can recharacterize the conversion. Or if taxpayer has not yet done the 401k rollover, they may want to delay it until January.