I Recently learned about the backdoor Roth IRA. I want to take advantage of it with future money, but I already have 60K in the traditional IRA (40K contributed with after tax $ and 20K in earnings). I want to defer paying taxes on the 20K until later when my tax bracket is lower or I have more disposable income. Is converting my current balance to my companies 401K plan the solution to avoid/defer the tax on my $20K in earnings and avoid a high 33 prorata % being applied to furture backdoor roth conversion?
I’ll rephrase for clarity, If I convert 100% of my current traditional IRA to my employers 401K to zero out my IRA account balance, and complete the 8606 form, will future $ put in the traditional account and moved into a roth IRA with the backdoor approach be impacted by the 60K historical funds now in my 401K? Will the IRS say we need to apply the pro rata 33% ratio to future backdoor roth conversions since you had that balance in your account in the past?
