On 1 Nov 2011
in
Maxing out 401k and two IRAs - possible?,
BogleRocks said:
The "backdoor Roth IRA" contributions you are describing will not work in this case. Yes, you can do as you describe, but your conversion is prorated over *all* of your pretax IRAs - traditional, rollover, SIMPLE, SEP - not just the deductible portion you contributed.
"If you have any other (non-Roth) IRAs, the taxable portion of any conversion you make is prorated over all your IRAs; you cannot convert just the non-deductible amount.[2] In order to benefit from the backdoor, you must either convert your other IRAs as well (which may not be a good idea, as you are usually in a high tax bracket if you need to use the backdoor), or else transfer your deductible IRA contributions to an employer plan such as a 401(k) (which may cost you if the 401(k) has poor investment options). "
http://www.bogleheads.org/wiki/Backdoor_Roth_IRA
You cannot specify to convert just the nondeductible portion, even if it is in a different account. Your conversion will be party taxable (based upon the ratio of deductible/total IRA balance), and your traditional IRAs will now have a partial cost basis.
