clobby said:
If you don't qualify for the standard IRA tax deduction, do you just fund the IRA and immediately backdoor Roth it?
There are 2 applicable income limits here. One is deductibility of traditional contributions. The other is direct Roth contributions. If over the Roth limit, that's where backdoor becomes a potential strategy. If under Roth, no reason to backdoor.
If you have ANY other (non Roth) IRA moneys pro rata becomes a concern. If you've rolled a 401k over to an IRA, own an IRA annuity, an IRA CD, SEP, SIMPLE, or so on. Many opportunities to get sideways of the law here.
As Squadron said, just because someone hasn't paid taxes on a transaction before doesn't mean they don't own them. A lot of people don't put this on their tax return because they don't know better. This is increasingly a focus for the IRS for audits. They have all of the information from brokers/banks to put this together, and it's a very easy query against 1040s of people who did conversions. Undoing an incorrect one isn't a fun project many years down the road.
I love threads like this. There are a lot of really smart people who have no idea what they're doing in this area, and can really benefit from good advice if only to make sure they stay out of trouble.
