Back door roth

I make too much to contribute to RIRA however i can contribute and deduct contribution into TIRA. I had a CPA tell me they do not think i can make a non deductible contribution into TIRA and then convert to RIRA. They believe that because i can make deductible contribution then i do not qualify to make non deductible contribution. Is this true?



  • No, this is not true. See code Sec 408(o)(2)(B)(ii) copied below:
  • (ii) Taxpayer may elect to treat deductible contributions as nondeductibleIf a taxpayer elects not to deduct an amount which (without regard to this clause) is allowable as a deduction under section 219 for any taxable year, the nondeductible limit for such taxable year shall be increased by such amount.   


In addition to the above, Pub 590 A under “Form 8606” states: “When you file, you can even designate otherwise deductible contributions as non deductible contributions.”



I need a quick reminder: Helping folks get money into a RIRA who make too much. He has $35,000 TIRA. So the Pro-Rate tax formula says he’ll owe tax on approximately 85% of his $6,000 contribution. “Paying tax now, and all tax free later” HIs tax preparer is saying, “Why would you ever do this” I need words….



Preparer’s question Is valid when people have a pre tax balance in their IRA. Therefore, the complete back door Roth strategy includes being able to roll any current pre tax balance into an accepting employer plan. So if this person has a 35,000 pre tax IRA, if they roil it into their 401k (some plans do not accept IRA rollovers and only a few accept them after the participant retired), they leaves only the 6000 current non deductible contribution. That 6000 can then be converted tax free. Also, some people may be in a lower tax bracket than they expect to be in retirement, and in that case it would be beneficial to convert the entire 41,000, owing tax on 35,000 of it.



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