Backdoor IRA w/SEP IRA
I have a backdoor IRA on my tax return that was executed with IRS rules to convert to a Roth IRA. My question is I also have a SEP IRA from an S-Corporation that I am an own 100% shareholder. Do I need to file a 8606 form in order to compute how much of the backdoor IRA is taxable because of the SEP IRA contributions from the S-Coporation? I am understanding that since the S-Corp is a totally separate entity vs. a Schedule C, Schedule F, etc., that the pro rata share does not come into play. My husband and I both contributed to the backdoor IRA, but I am the sole ownership of the S Corp.
Any advice and/or answers were be completely appreciated!
Permalink Submitted by Alan - IRA critic on Fri, 2019-04-26 16:22
The SEP IRA contributions are made to an individually owned IRA (your IRA) using S Corp W-2 income. The S Corp does not own the IRA as you can easily determine from your IRA documents. The year end value of all non Roth IRAs you own must be added up and reported on line 6 of Form 8606 for the form to properly determine the non taxable and taxable amounts of your conversion. The non taxable amount is pro rated, so the SEP IRA balance will make your conversion mostly taxable. If your husband also made a non deductible TIRA contribution to his IRA and has no other non Roth IRA accounts, his conversion will be non taxable.