Backdoor Roth IRA Contribution with old Pre-tax 401(k)
I get hung up on whether or not old, non-current employer pre-tax 401(k) plans are included in the proportional determination when trying to make a back-door Roth IRA contribution.
For example, if I have $95K in an old pre-tax 401(k) plan and then make a $5K after-tax nondeductible contribution to an IRA, can I convert that $5K to a Roth free and clear of taxes or will 95% of the conversion be taxable because the old 401(k) plan is included?
Permalink Submitted by Alan - IRA critic on Wed, 2020-07-15 16:34
Only non Roth IRA balances are considered for pro rating distributions/conversions. The 401k balance is disregarded, but if it were ever rolled over into an IRA any future conversions would be mostly taxable.