Doing a back door Roth prior to transferring a 403 B (401 K) to a IRA

Submitted by Edward Drinkmann on Wed, 2020-04-01 06:21

I am retiring July 1 this year. Can I contribute to a non-deductible IRA and then convert that to a Roth and not be taxed on the conversion? Then later in the year transfer my tax deferred 403B (401K) to an IRA without triggering the pro-rata rule on the prior IRA to Roth conversion?
Thank you



Submitted by David Mertz on Wed, 2020-04-01 13:13

  • No.  Transferring a qualified retirement plan like a 403(b) or 401(k) to a traditional IRA later in the year will trigger the pro-rata calculation on Form 8606 Part I because the year-end balance in the traditional IRA that received the rollover from the qualified retirement plan must be included on line 6 of Form 8606.
  • There is no such thing as a “nondeductible IRA.”   There is only basis in nondeductible traditional IRA contributions that applies to your traditional IRAs in aggregate.

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