Hi all,
I am new to this forum. I have looked at many Roth's related discussions but didn't find my answer. So I ask it here...
Before Roth became law, I was given the guidance to put some after tax $ into an IRA. The plan was to convert to Roth using the back door method (my income was too high to qualify for any direct Roth funding). I did just that, but when I did the conversion, Turbo tax surprised me...
What happened: I put about $20K each for both DW and myself into a separate after tax IRA (total of $40K for both of us thru multiple years).
Our situation: We did have other pre-tax IRA accounts having ~$500K back then.
When I did my conversion, Turbo tax appeared to take my total IRA $ into account. When I tried to convert the $40K after tax account into Roth using the back door method, Turbo tax wanted me to pay tax on ~90% of that monies. I was expecting not to pay tax on that $40K since that was after tax $ that I put into a separate IRA. I guess was that my other pre tax IRA accounts interfere with the back door conversion (but I was never sure).
Did I miss something, or did Turbo tax not understood my input?
Do I need to take certain steps to allow the conversion to take place without the extra tax (on after tax IRA $)?
Many thanks for any insight/response
I am new to this forum. I have looked at many Roth's related discussions but didn't find my answer. So I ask it here...
Before Roth became law, I was given the guidance to put some after tax $ into an IRA. The plan was to convert to Roth using the back door method (my income was too high to qualify for any direct Roth funding). I did just that, but when I did the conversion, Turbo tax surprised me...
What happened: I put about $20K each for both DW and myself into a separate after tax IRA (total of $40K for both of us thru multiple years).
Our situation: We did have other pre-tax IRA accounts having ~$500K back then.
When I did my conversion, Turbo tax appeared to take my total IRA $ into account. When I tried to convert the $40K after tax account into Roth using the back door method, Turbo tax wanted me to pay tax on ~90% of that monies. I was expecting not to pay tax on that $40K since that was after tax $ that I put into a separate IRA. I guess was that my other pre tax IRA accounts interfere with the back door conversion (but I was never sure).
Did I miss something, or did Turbo tax not understood my input?
Do I need to take certain steps to allow the conversion to take place without the extra tax (on after tax IRA $)?
Many thanks for any insight/response