Bogleheads.org

Here is what I did. I would like to ask the forum if there are any glaring errors or omissions based on the steps I have taken. I am still working, 64 yrs old, MFJ if it matters. All 8606 forms have been filed with IRS.

1. Over many years I rolled prior employers’ 401K balances into a tIRA.
2. In 2017 I made a non-deductible contribution of $5375 to tIRA
3. In 2018 I made a non-deductible contribution of $1125 to tIRA, making my IRA consist of $6500 of post-tax, non-deductible money, and >$900K of pre-tax old 401K money
4. This year (2020) I moved $6500 in the tIRA from index funds to a MM account in the tIRA.
5. I rolled over the balance, >$900K, into my workplace 401K
6. I converted the $6500 into a Roth IRA
7. On 7/11/20 I contributed $7000 (for 2019) to tIRA and converted that to Roth
8. Later this year I plan to contribute another $7000 for 2020 to tIRA and convert to Roth if I have the funds to do so

Here are my concerns. I had $6500 sitting in tIRA for a couple of years so I must have had some growth. I did not count for that in the rollover to the 401K. When I sent the entire balance (minus the $6500) to 401K did this cause a problem, either taxes or penalty? I know moving forward if I do this I will convert as soon as possible, and also I will ensure that the amount in the tIRA on 12/31 of those years is zero.
Thanks in advance!

McDougal wrote:1. Over many years I rolled prior employers’ 401K balances into a tIRA.
2. In 2017 I made a non-deductible contribution of $5375 to tIRA

Was this contribution made FOR 2017 or 2016?

3. In 2018 I made a non-deductible contribution of $1125 to tIRA, making my IRA consist of $6500 of post-tax, non-deductible money, and >$900K of pre-tax old 401K money

Was this contribution made FOR 2018 or 2017? Did you file Form 8606 with your 2016, 2017, or 2018 taxes to track the $6500 non-deductible basis?

4. This year (2020) I moved $6500 in the tIRA from index funds to a MM account in the tIRA.
5. I rolled over the balance, >$900K, into my workplace 401K
6. I converted the $6500 into a Roth IRA
7. On 7/11/20 I contributed $7000 (for 2019) to tIRA and converted that to Roth

Did you file Form 8606 with your 2019 taxes to track the $13,500 non-deductible basis?

I had $6500 sitting in tIRA for a couple of years so I must have had some growth. I did not count for that in the rollover to the 401K. When I sent the entire balance (minus the $6500) to 401K did this cause a problem, either taxes or penalty?

No. The $6500 non-deductible basis was sequestered and the pre-tax assets (including the growth) were rolled into the 401k. You're fine.

Duckie wrote: ↑Mon Jul 27, 2020 7:00 pm

McDougal wrote:1. Over many years I rolled prior employers’ 401K balances into a tIRA.
2. In 2017 I made a non-deductible contribution of $5375 to tIRA

Was this contribution made FOR 2017 or 2016? This was for 2017

3. In 2018 I made a non-deductible contribution of $1125 to tIRA, making my IRA consist of $6500 of post-tax, non-deductible money, and >$900K of pre-tax old 401K money

Was this contribution made FOR 2018 or 2017? Did you file Form 8606 with your 2016, 2017, or 2018 taxes to track the $6500 non-deductible basis? This was for 2018. All 8606 forms were filed.

4. This year (2020) I moved $6500 in the tIRA from index funds to a MM account in the tIRA.
5. I rolled over the balance, >$900K, into my workplace 401K
6. I converted the $6500 into a Roth IRA
7. On 7/11/20 I contributed $7000 (for 2019) to tIRA and converted that to Roth

Did you file Form 8606 with your 2019 taxes to track the $13,500 non-deductible basis? No, 2019 taxes were filed in April 2020, made the contribution in July 2020 for tax year 2019. Can I wait till I file 2020 taxes or do I need to file 8606 now for the 2019 contribution?

I had $6500 sitting in tIRA for a couple of years so I must have had some growth. I did not count for that in the rollover to the 401K. When I sent the entire balance (minus the $6500) to 401K did this cause a problem, either taxes or penalty?

No. The $6500 non-deductible basis was sequestered and the pre-tax assets (including the growth) were rolled into the 401k. You're fine. Thanks for clarifying.

Hi Duckie, please see above.

McDougal wrote:

Duckie wrote:Did you file Form 8606 with your 2019 taxes to track the $13,500 non-deductible basis?

No, 2019 taxes were filed in April 2020, made the contribution in July 2020 for tax year 2019. Can I wait till I file 2020 taxes or do I need to file 8606 now for the 2019 contribution?

Download the 2019 Form 8606, print it out, fill it out (it should be just lines 1, 2, 3 & 14), and snail-mail it in before the end of the year. That way the IRS will have it before you file your 2020 taxes.