Adding funds into TIRA after having completed a back door Roth conversion
Hello,
I had placed $6,500 into a TIRA (for tax year 2018) and $7,000 (for tax year 2019) in March 2019. Converted all $13,500 to Roth IRA in April 2, 2019. This year, I am filing form 8606 denoting the 2018 non-deductible contribution of $6.500 and with a taxable amount of 0 (zero). Next year, I will file 2019 form 8606 to denote the $13,500 being exempt from taxes and contribute the maximum allowed for 2020 sometime early in the year. The following year, the form 8606 will only need to show the 2020 contribution since the basis should be zero. This should continue on for the following years. Is this correct?
What happens if any pre-tax funds are deposited into a TIRA in September 2019?
What if the pre-tax funds are rolled over into a different account type (non-IRA) before Dec 31, 2019?
Thanks.
Steph
Permalink Submitted by Alan - IRA critic on Fri, 2019-04-05 23:52
First paragraph is correct. If there is a pre tax TIRA balance on 12/31/2019 then the conversion you just did will be taxable subject to pro rate calculations of Form 8606. But if you roll this pre tax balance out of your IRAs by the end of 2019, your conversion taxation will ignore that your IRA had the balance up to the point you rolled the pre tax balance out to an employer retirement plan. It is a good idea to download a Form 8606 and test the proposed transactions to see why the above is true.