Last year I contributed to my Traditional IRA and did a back door conversion.
It so happened that I had also moved quite a bit of money out of my Traditional IRA to my employer 401(k) so that i don't have any basis in the pre tax account for 2016. So by 12/31 i had zero balance in my traditional IRA.
Now my tax software - TaxAct considers that to be under the pro-rata rule and doesn't consider the pre-tax distribution as an exception to the rule.
It's using IRS Pub 590-B worksheet 1-1 to calculate this amount and it seems like this worksheet only cares about if there was a distribution from the traditional IRA and a conversion simultaneously in the same year, doesn't care for any allowable exceptions.
Can you please suggest what i should do with this?
I'm thinking of either re-characterization or return of contribution.
Greatly appreciate your immediate response.
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