Question

Backdoor Roth IRA with aftertax dollars

Forum|Forum|1 year ago
February 15, 2025
1 reply
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I opened a completely new traditional IRA and Roth IRA accounts in Fidelity towards the end of 2024 to try to take advantage of the backdoor Roth strategy. I put in $2000 after tax dollars into my traditional IRA account, and immediately transferred $270 from the traditional to Roth account.

At the beginning of this year, I got a 1099-R from Fidelity. Both box 1 and 2a have $270 in it. After putting in all the info in the wages and deduction section, I checked the 1040 form. Line 4a (IRA distribution) and 4b (taxable amount) are both $270.

Am I getting taxed for the $270 aftertax dollars I transferred to the Roth account? Should I be getting taxed? I thought backdoor Roth is a taxfree event as long as I am contributing with aftertax dollars and did not earn any additional income when it was in the traditional account.

A

AnnetteB6

You are correct regarding the expected tax treatment of converting non-deductible Traditional IRA contributions to a Roth IRA. However, reporting this in your tax return is a two-step process. You have entered the information from your Form 1099-R that reported the distribution. Now you need to enter the non-deductible Traditional IRA contribution.

Take a look at the following TurboTax help article for the steps:

How do I enter a backdoor Roth IRA conversion?

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