non deductible IRA tax hack

by | Dec 24, 2022 | Backdoor Roth IRA | 9 comments

non deductible IRA tax hack




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In this video, I’m talking about the non deductible IRA and the traditional IRA. Keeping track of your deductible and non deductible traditional IRA contributions can help you save time and money in taxes. The Pro Rata Rule pulls in the deductible contributions from the traditional IRA when you convert. It’s important to keep track of those contributions to avoid having issues with the Pro Rata Rule.

I’m also talking about Roth IRA conversions or simply Roth conversions, backdoor Roth IRA, the pro-rata rule for non deductible contributions and the traditional IRA.

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9 Comments

  1. dbest47

    Travis,I like the 2 account option…are NON DEDUCTIBLE contributions allowed past the $6000 IRS limits ?

  2. Ajay Sharma

    This is my second year contributing $6000 towards non deductible IRA. Basis calculation in the form 8606 would be cumulative of previous year's non deductible portion of the contributions or just for the current year? So for this year my basis would be $12000 or just $6000. I'll appreciate any response to it.

  3. KV

    Sounds like, unless you have zero dollars in your other IRA (the one you took tax deductions on), you cannot really do a backdoor IRA?

    Can you rollover all your IRA into employer sponsored 401K, wipe your slate clean, and then do a traditional IRA and covert to roth IRA?

  4. Shawn Holladay

    Nice video. thanks. Quick question. I assume if we do a IRA conversion again next year, that non deductible contribution have been reduced by last years conversion. In your example of 10K conversion( 6% from non deductible =$600…so next year, you would be $5400 (6000-600) in total non deductible contributions (use that in the same formulas). is that right?

  5. Emancipare - FLAT-FEE, FEE-ONLY FIDUCIARY

    Another hack is that you can undo this to some extent by rolling the deductible portion into a 401k plan that allows it, thus leaving the non-deductible part by itself. Might be a good topic to cover.

  6. Pete Par

    Thanks

  7. Adam Kathy

    Thanks sir Fixhackservicescom is the best to work with

  8. Even Steven

    For 2019, married filing jointly, husband makes over 124k and has 401k at work, wife is a stay home mom. Thier traditional IRA contribution would be non deductible, so does this mean they will get taxed later during retirement? 1. If this is the case, wouldn't it be taxed twice? 2. Wouldn't it be better to contribute to a Roth IRA instead, so they don't pay tax at withdrawal?

  9. R s

    Thank you very helpful video

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