IRA back door pro data

Forum|Forum|11 months ago
April 6, 2025
2 replies
0 views

Hi,

I was hoping to do the back door IRA conversion but made huge mistake. I already had traditional IRA account with account balance from previous years, then contributed $7k for 2024 on 27 the December 2024, then did $7k Roth conversion on Jan 10th when i did this i didn't clearly understand backdoor rule. Is there way to move the money back without pay tax or penalty? The goal was to use backdoor for 7k to Roth without paying any taxes. What are best option?

For example: let say the traditional IRA account already $100k and contributed $7k in December 2024 contribution IRA and did Roth conversion on 10th Jan 2025.

To make matter worse, i also contributed $7k to traditional ira for 2025 in Jan 20th, 225 and did Roth conversion end of jan 2025.

What is my best option now to get around this, is there any way to avoid paying taxes?

I have not received any 1099 R as I expected year 2024 1099 r to be issued in in 2026 and i assume 2025 1099 R will be issued 2026 as both conversion for year 2024 and 2025 were done jan 2025. What do need to this year to report to IRS?

Thank You

TurboTax Premier Online

fanfare

By law, once a conversion is done, you cannot undo it.

You are stuck with the consequences of your actions.

@rhonwall14

DanaB27

You might want to think about a reverse rollover where you rollover IRA money to a company plan, like a 401(k). Only pre-tax funds can be rolled from an IRA to a company plan. Therefore, you would isolate the basis and could perform the Backdoor Roth procedure. But it only works if your employer allows it, not all plans do.

On your 2024 return you will report your nondeductible Traditional IRA contribution for 2024 and TurboTax will add the 2024 Form 8606 with the basis on line 14:

Click on "Search" on the top right and type “IRA contributions”
Click on “Jump to IRA contributions"
Select “traditional IRA”
Answer “No” to “Is This a Repayment of a Retirement Distribution?”
Enter the amount you contributed
Answer “No” to the recharacterized question on the “Did You Change Your Mind?” screen
Answer the next questions until you get to “Any Nondeductible Contributions to Your IRA?” and select “Yes” if you had a nondeductible contribution before this tax year.
Enter your basis in the Traditional IRA from your 2023 Form 8606 line 14 (if you had a basis in the prior year)
On the “Choose Not to Deduct IRA Contributions” screen choose “Yes, make part of my IRA contribution nondeductible” and enter the amount (if you have a retirement plan at work and are over the income limit it will be nondeductible automatically and you only get a warning and then a screen saying $0 is deductible).

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dmertz

As fanfare said, there is no option to undo a Roth conversion.

Regarding the "reverse" rollover that DanaB27 suggests, since you have already converted to Roth in 2025 and amount equal to your basis in nondeductible traditional IRA contributions, you would have to roll over to an employer plan all of your remaining traditional IRA funds. That would cause all $14,000 of your basis to be applied to your $14,000 of Roth conversions. If you can't do this rollover, only about 12% of your Roth conversions will be nontaxable and 88% of your basis in nondeductible traditional IRA contributions will remain in your traditional IRAs to be applied to future ordinary traditional IRA distributions. Not what you originally intended, but not necessarily a huge mistake since it just means you will be paying some additional taxes with your 2025 tax return instead of paying taxes on this amount in the future.