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Backdoor Roth Conversion in the same year as 401K to IRA rollover - am I hosed?

Started by david123, November 06, 2019, 11:05:27 AM

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OK, I was dumb.

Early in the year (January, 2019) i made a backdoor ROTH conversion (contribute $6,000 to traditional after tax IRA, covert to ROTH).

I don't know why, but I totally forgot about this, and my company changed ownership later in 2019, so I rolled my 401K over to an IRA.

I think I did a very bad thing.  I think I am going to get stuck for a big tax bill doing both in the same year.  I have an appointment with my tax guy in 2 weeks, but do I have any recourse?  Can I convert the ROTH back, or can I roll the IRA back into my 401K?  The 401K rollover was sizable, so I don't really want to pay taxes on it.  How do you even determine taxes on that?

Thanks for any help.


I don't think you are hosed at all. The absolute dollar amount isn't very big. But of course, talk to a tax professional.




The ability to do back-doors is a great reason to keep all pre-tax money in a 401k with none in a Traditional IRA


If you preserved the nature of your 401k funds by rolling over into a designated "rollover IRA", you should be able to roll these back into another ERISA qualifying account prior to year end to avoid the proration problem since the proration of IRA amounts is done based on 12/31 balances.

You can use either a Solo 401k (if you have your own business) or another employer's plan. Additionally, the Solo 401k may allow you to contribute further amounts after-tax and then convert those funds into a Solo Roth 401k - effectively the same thing you're doing with the backdoor but for potentially a lot more money each year.


Ahh the pro-rata rule rears its ugly head. That is why I cannot/do not do any more backdoor Roth contributions. The taxes due will not be tremendous, but it nullifies the benefits of transferring $6000 post tax dollars if you have to basically pay taxes on the transfer again.


The way I understand how the backdoor Roth conversion is: You can convert the principal portion to Roth, no tax implication, any gains from the after tax contribution has to be rolled into a traditional IRA. In your case, if you originally contributed $6000 after tax fund in the 401K, you can roll that amount into a Roth, no tax liability now or later. If this contribution has a $1000 gain, this part will be rolled into a traditional IRA, you will have to pay tax when you withdraw, not in the current year though.