2

I have a Traditional IRA funded with non-deductible funds (in addition to a Roth IRA) and my spouse has a Traditional IRA funded 100% with deductible funds. I'm interested in converting 100% of my TIRA into my Roth IRA (a.k.a. backdoor Roth IRA) and wondering:

Do I need to include my spouse's TIRA in any pro-rata tax computation on the rollover or are my IRA actions unaffected by my spouse's IRA accounts?

We file jointly and my spouse is not covered by any workplace 401(k) or such.

4

The I in IRA stands for Individual. You can do a backdoor conversion of all or part of your Traditional IRA to a Roth IRA all by yourself regardless of whether your spouse converts her IRA or not, and the taxable part of the rollover is determined by what your Form 8606 says, not what is on her Form 8606. But since you file a joint return with your spouse, she will have the ineffable joy of being as liable as you for the income tax that is due on the conversion: on a joint tax return, both spouses are jointly and severally liable for the tax due (no halfsies). If one person does not pay, the other is liable for the entire amount.

  • I don't follow on your comment on her being liable for the tax due on conversion. When I convert, I'm only taxed on the increase, not on the non-deductible part, right? Are you just highlighting that the tax implications are joint even though it's an individual IRA conversion decision? – Spig Mar 8 '14 at 19:58
  • You are correct that you will be taxed only on the increase in value of your Traditional IRA over and above the sum of all your post-tax contributions. However, be aware that if you have Traditional IRAs with pretax contributions in addition to the Traditional IRA with post-tax contributions (basis) that you are planning on rolling over to a Roth IRA, then you will be deemed to have rolled over only a part of the basis, and a much larger chunk of money (more than just the earnings in the IRA being rolled over) will be taxable income. And yes, on a joint return, the tax obligation is on both. – Dilip Sarwate Mar 9 '14 at 1:13
  • I have no Traditional IRAs with pre-tax contributions, only post-tax. The only pre-tax IRA's are my spouses so it sounds like I can safely convert without needing to do any pro-rata calculations as a result of her pre-tax Traditional IRA. – Spig Mar 11 '14 at 15:00

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.