Putting money in Traditional IRA AFTER backdoor Roth IRA

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black_knight_32
Posts: 131
Joined: Wed Apr 29, 2015 9:08 pm

Putting money in Traditional IRA AFTER backdoor Roth IRA

Post by black_knight_32 »

I’ve already completed a backdoor Roth IRA for 2024. I’m planning on rolling over a 401(k) from a previous employer into a traditional IRA account this year.

Since I’ve already completed the backdoor Roth IRA, will this impact me in anyway for 2024? Or is the pro estate rule calculated ONLY at the time the backdoor Roth is completed?
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plutoblackhole
Posts: 180
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Location: Kuiper Belt

Re: Putting money in Traditional IRA AFTER backdoor Roth IRA

Post by plutoblackhole »

What matters is your traditional IRA balance on December 31st, so it wouldn’t be advisable to rollover the 401(k) this year. Unless the 401(k) is small and you’re willing to just Roth covert the whole thing.
terran
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Joined: Sat Jan 10, 2015 9:50 pm

Re: Putting money in Traditional IRA AFTER backdoor Roth IRA

Post by terran »

Yes, this will impact our Roth conversion because the pro rata rule applies to your year end balance in the year you make the conversion. If you roll your previously deduected 401(k) into an IRA you'll owe tax on the amount you converted as a percentage of the total amount in yout IRA (conversion amount divided my conversion amount plus the amount rolled over from your 401(k) or thereabout).
Navillus1968
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Location: FL Tampa Bay

Re: Putting money in Traditional IRA AFTER backdoor Roth IRA

Post by Navillus1968 »

black_knight_32 wrote: Sun Feb 11, 2024 10:01 pm I’ve already completed a backdoor Roth IRA for 2024. I’m planning on rolling over a 401(k) from a previous employer into a traditional IRA account this year.

Since I’ve already completed the backdoor Roth IRA, will this impact me in anyway for 2024? Or is the pro estate rule calculated ONLY at the time the backdoor Roth is completed?
Yes, a rollover of a 401k to TIRA will impact you- it will spoil your backdoor Roth's tax-free status. As other posters have said- the pro rata math is done using the TIRA balance on 31 DEC of the tax year. TIRA balance at the time of the BDR conversion is moot.
You should either rollover the 401k to your current employer plan or leave it alone. If you execute your current plan, your BDR will be heavily taxed (unless the 401k balance is tiny).
placeholder
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Re: Putting money in Traditional IRA AFTER backdoor Roth IRA

Post by placeholder »

How large of an account are we talking?
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