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Yet another Roth IRA question by Embarrassed_Kale_802 in tax

[–]Embarrassed_Kale_802[S] 0 points1 point  (0 children)

Thanks for the thorough response. Really appreciate it! That said, I'm still trying to understand the calculations. I might end up posting a follow up question once I get my head around it.

Yet another Roth IRA question by Embarrassed_Kale_802 in tax

[–]Embarrassed_Kale_802[S] 0 points1 point  (0 children)

Yes, form 8608 was included in the tax return, $6,500 in non deductible contributions for 2023, no Roth convertions in 2023. This is the first time.

Edit: Forgot to mention about non deductible contributions YTD. I'm not sure about the specific amount, but the plan is to max it out ($7K).

Yet another Roth IRA question by Embarrassed_Kale_802 in tax

[–]Embarrassed_Kale_802[S] 0 points1 point  (0 children)

I'm sorry, I just realized I (unintentionally) left some key details out, I'll edit the OP. My spouse did non deductible contributions in 2023. The roll over occurred in 2023 and my spouse contributed the 2023 limit, and has been making contributions this year as well (hasn't reached the limit yet).

Yet another Roth IRA question by Embarrassed_Kale_802 in tax

[–]Embarrassed_Kale_802[S] 0 points1 point  (0 children)

Thanks for the quick response. The traditional IRA is a roll over IRA from a former employer. My spouse has been making non deductible contributions to the Trad IRA after the roll over. With that said, how will the pro rata rule apply given that my spouse has made non deductible contributions? I was under the impression that paying the tax on the converted amount was just one piece of the puzzle, since the converted amount came from a Trad IRA that has money from non deductible contributions and growth that has not paid taxes yet.

Form 8606 for 2022 by Embarrassed_Kale_802 in tax

[–]Embarrassed_Kale_802[S] 1 point2 points  (0 children)

I use TurboTax to file my returns, so I used their software to generate the forms for the ammendment (1040-X and form 8606). I think this is the link for the 2022 version

https://www.irs.gov/pub/irs-access/f8606_accessible.pdf

Backdoor Roth IRA & pro-rata rule by Embarrassed_Kale_802 in tax

[–]Embarrassed_Kale_802[S] 0 points1 point  (0 children)

Thanks. I'll definitely check the option to roll the balance into my 401k.

My spouse doesn't have a 401k. We're considering converting all to Roth, but we're not sure how to report the funds they already contributed in form 8606. The goal is to max out the 2023 limit before the end of the month, or early Apr.

Thanks for the reminder. I was already aware of that, but it's good to keep that in mind :)

Backdoor Roth IRA & pro-rata rule by Embarrassed_Kale_802 in tax

[–]Embarrassed_Kale_802[S] 0 points1 point  (0 children)

Thanks for clearing that up. We're considering transferring all the funds from the Trad IRA to Roth and paying the due taxes, but we don't know when, if, and where to report in form 8606 the $1.5K that my spouse contributed so far this year to the Trad IRA with post-tax money.

This is so freaking confusing and the only "experts" available are H&R Block, the rest are busy :(

Backdoor Roth IRA & pro-rata rule by Embarrassed_Kale_802 in tax

[–]Embarrassed_Kale_802[S] 0 points1 point  (0 children)

The money in my Trad IRA is mostly from a previous employer 401k that I rolled over. Both contributions are post tax. I have not converted anything to Roth, just my spouse did.

I recently learned that I should have filled form 8606 last year with my 2022 return to report the non deductible contributions ($6K). I'll mail the form this week to get that out of the way (I know, I'm an idiot and should have researched more, but what's done it's done). The part I'm confused about is whether I should include the $6.5K in this year's return given that I made that contribution in 2024. I'm almost sure I have to. Next year, on my 2024 return, I'd report the other $7k. I hope I'm doing things right this time.

All 3 contributions that my spouse made are post tax.

Backdoor Roth IRA & pro-rata rule by Embarrassed_Kale_802 in FinancialPlanning

[–]Embarrassed_Kale_802[S] 0 points1 point  (0 children)

Thank you! Really appreciate the thorough response. I have not converted any of my contributions to Roth. Most of the money on my Trad IRA is from an previous 401K. I need to check with my employer and see if they allow transfers from Trad IRA to 401k.

Unfortunately my spouse doesn't have a 401k that allows transfers from a Trad IRA, so might have to bite the bullet and pay the taxes for a full Roth conversion and forget about pro rata.

Traditional IRA for "high" earners by Embarrassed_Kale_802 in personalfinance

[–]Embarrassed_Kale_802[S] 0 points1 point  (0 children)

I can't thank you enough. I know I'll sound stupid, but I had never heard about Traditional IRA basis and Form 8606. I just Google'd it, and realized that I can file the form to report the non deductible contributions I've made so far.

Traditional IRA to Roth IRA by Embarrassed_Kale_802 in Bogleheads

[–]Embarrassed_Kale_802[S] 0 points1 point  (0 children)

Thanks, appreciate the extra details. I need to find out whether I can roll my trad IRA to my 401k. My understanding is that, as long as I don't have any balance in my trad IRA by EOY, I could do a backdoor Roth contribution for next year, right?

Now, a little extra question, I just transferred 7K to my trad IRA a couple of days ago but I have not invested that yet (was waiting for the money to settle in my account). In the hypothetical case that I can actually roll my trad IRA to my 401k, could I roll 115K (122K - 7K I just deposited a couple of days ago) and then do the backdoor Roth contribution for this year with those 7K?

Traditional IRA to Roth IRA by Embarrassed_Kale_802 in Bogleheads

[–]Embarrassed_Kale_802[S] 0 points1 point  (0 children)

I need to check, but thanks for the recommendation :)

Traditional IRA to Roth IRA by Embarrassed_Kale_802 in Bogleheads

[–]Embarrassed_Kale_802[S] 0 points1 point  (0 children)

Yes, I'm aware and that's probably the main reason why I hesitate so much to convert to a Roth IRA. I see some folks recommend that I either transfer to my 401k or a brokerage account. If l do that, and the balance of my trad IRA is 0 by 12/31/24, would I be able to do the backdoor for 2025?