Backdoor Roth but have a traditional IRA account

Submitted by Alon David on Sun, 2024-10-27 20:21

Hello ,

Thank you for your help. I currently have around 20k in my roth ira and 13k in my traditional ira. The reason why i contributed to my traditional ira was I didnt realize that roth ira contributions would be more beneficial for me in the long run. Now, because my income is too high I would like to perform a backdoor roth ira as my yearly contribution. How do I now convert my 13k in my traditional ira to my roth ira and keep the traditional ira account only for backdoor roth ira purposes in the future.

  1. I made the contribution to the TIRA as a normal contribution. From my knowledge this is tax free correct? Its only now that I am converting it into my roth that is becomes taxed. Is that correct?
  2. My plan is to convert all 13k at once this year. Is that permissible?
  3. What tax form do I need to fill out for this purpose?


Submitted by Alan - IRA critic on Sun, 2024-10-27 23:46

If you (or a spouse) is covered by a retirement plan at work, your TIRA contribution will be non deductible and reported as such on Form 8606. If this was your only TIRA balance, you convert then convert tax free to your Roth IRA. But because you have a pre tax TIRA balance of 13,000, your conversion would be about 2/3 taxable (13,000/20,000).
While you do not have to convert the entire 13,000 this year, if you do you will owe tax on 13,000 of the conversion, and that will eliminate the pre tax balance in your IRA, so that future back door Roth conversion will be non taxable. You could also convert part of the balance this year and the rest in the next year or two to spread out the taxable income over 2 or 3 years. Your choice. You can convert as much as you wish.
Form 8606 is used to report the non deductible contribution (Part I) and also to report conversions you do in the same year (Parts I and II). The 8606 will calculate the taxable amount of your conversions and will show on line 14 how much non deductible balance (known as your IRA basis) to be carried over to future years.
You may wish to download a copy of the form to see how it works.

Submitted by Alon David on Wed, 2024-11-13 17:33

Thank you this is a huge help. I spoke with my accountant and she told me that she deducted last years TIRA contribution of $6,500.  For my own clarity do is it as easy as contributing this years contribution of $7,000 to the TIRA. Which will bring up the balance to $20,000 ($13,000+$7,000). Then converting $20,000.00 to my roth. I just want to make sure I have this correct. Also how do I fill out the form 8606 differently than if I just did it without a prior TIRA balance?

Thank you for your help in clarifying this issue for me.

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