Non-deductible IRA money for Roth conversion

[fh2000]

Next year will be the first that we can start doing Roth Conversion.

I am rolling over TIRAs (rollover IRAs) to ex-employer 401K (which they allow). I will have one non-deductible IRA remaining, which I contributed in early 2000's. I never got around doing back door Roth. The contribution amount totaled: $16000. I have saved Form 8606 to show the contribution base. Today's value: $28000.

If I convert this account to Roth, I assume that income recognized is the difference: $12000 and pay tax on using my cash account. I am trying to control income level for ACA subsidy. The original $16000 can be converted without tax or recognized as income. Am I correct?

 

[kaneohe]

Yes, I believe you are correct. Have you asked the 401K folks if you can also roll in the untaxed earnings from your non-deductible contributions. Some will accept all untaxed amounts but they cannot accept basis........the non-deductible contributions. If you can do that, your taxes will be 0 to minimal.

 

[SecondCor521]

I think you're both correct. Take a look at Form 8606 and its instructions.

One thing to note is that the form somewhere wants to know if you have any pre-tax traditional IRAs as of the end of the calendar year. So it would be safest to accomplish the traditional IRA -> 401(k) rollover by 12/31/19 and then do the non-deductible IRA -> Roth conversion after the new year. Other ways may also work. It sounds like that's what you're doing and want to do anyway, just thought I'd point it out.