Does Inherited IRA Affect Backdoor Roth Conversion?

Understanding Backdoor Roth IRA and Inherited IRA:

A Backdoor Roth IRA is a strategy used to contribute to a Roth IRA when your income exceeds the contribution limits. It involves making a non-deductible contribution to a traditional IRA and then converting it to a Roth IRA.

An inherited IRA is an IRA that you inherit from someone else, such as a parent or spouse. You are not allowed to make contributions to an inherited IRA, but you are required to take distributions from it according to the required minimum distribution (RMD) rules.

Impact of Inherited IRA on Backdoor Roth Conversion:

The good news is that inherited IRAs do not affect Backdoor Roth conversions. This means that you can still use the Backdoor Roth strategy even if you have an inherited IRA.

Key Points to Remember:

  • Inherited IRAs are not included in the pro-rata rule calculation for Backdoor Roth conversions.
  • Distributions from inherited IRAs do not affect the tax basis of your non-deductible IRA contributions.
  • You will still need to pay taxes on any earnings that have accumulated in your inherited IRA.


Let’s say you have $10,000 in an inherited IRA and you make a $6,000 non-deductible contribution to a traditional IRA. You then convert the entire $16,000 to a Roth IRA.

In this case, the $10,000 from the inherited IRA will not be taxed when you convert it to a Roth IRA. However, you will need to pay taxes on the $6,000 of earnings that have accumulated in your traditional IRA.

Additional Considerations:

  • If you have other traditional IRA accounts with pre-tax contributions, you may need to pay taxes on a portion of the conversion.
  • It is important to consult with a tax advisor to determine the best strategy for your individual situation.

Inherited IRAs do not affect Backdoor Roth conversions, so you can still use this strategy to save for retirement even if you have an inherited IRA. However, it is important to be aware of the tax implications of converting an inherited IRA to a Roth IRA.

I disagree with the following sentence: “because the distribution was from an inherited pre-tax traditional IRA, it will in effect decrease the tax basis of the Non-deductible IRA in the year of distribution and contribution, so when the Non-Ded IRA is converted, the tax basis decreases and will create a small taxable event on Form 8606.”

As a result, even though the husband still aggregates all of his IRAs and the wife aggregates all of hers, their IRA accounts are not combined throughout the marital unit. Additionally, an individual’s personal IRAs and any inherited IRA accounts are not combined on their behalf. Additionally, any current Roth IRAs and the corresponding after-tax contributions made to these accounts are not combined.

I’m not sure if I’m understanding this correctly, but the explanations I found below might suggest that when using the pro-rata rule, inherited IRAs are not added to the total of your own IRAs. Additionally, the distribution from the inherited pre-tax traditional IRA will reduce the tax basis of the non-deductible IRA in the year of distribution and contribution because the inherited IRA is subject to annual required minimum distributions (RMDs). This will result in a small taxable event on Form 8606 when the non-ded IRA is converted.

In order to complete the “Backdoor ROTH,” my client contributed $6000 to a non-deductible IRA, which he then converted to a ROTH IRA. However, he also has an inherited IRA (not spousal). According to what I’ve read, the inherited IRA has no bearing on pro-rata taxes (which result from the pre-tax funds in the inherited IRA), and the ROTH conversion is tax-free as long as he doesn’t have any other traditional, simple, SEP, or other IRAs.

You cannot treat an inherited traditional IRA as your own if it comes from someone other than your departed spouse. This implies that you are unable to contribute to the IRA in any way. Additionally, it implies that no money may be rolled over into or out of the inherited IRA. Nonetheless, if the IRA into which the funds are being transferred is established and kept in the name of the departed IRA owner for your benefit as beneficiary, you are permitted to make a trustee-to-trustee transfer.

What if you want to convert the inherited IRA to Roth as well?

You cannot change an inherited IRA to a Roth IRA if you are not the spouse. The law doesn’t allow it. It must be maintained separately as an inherited IRA, and required minimum distributions must be taken out.

If you are the spouse, you cannot convert the inherited IRA to a Roth IRA until you have made the IRA your own. Renaming the inherited IRA in your own name would be the simplest way to make it uniquely yours.

More on inherited IRAs from The IRA Owner’s Manual by Jim Blankenship, CFP, EA:

You are paying 5–10 times too much if you are paying an advisor a percentage of your assets. Find an impartial advisor, pay for advice, and use that advice alone.

Do Inherited IRAs Affect Backdoor Roth IRAs? YQA 189-1


Can a Roth conversion be done on an inherited IRA?

Only the spouse of the deceased person is permitted to convert an inherited IRA to a Roth. Any other type of beneficiary may not convert an inherited IRA to a Roth IRA.

Who is not eligible for backdoor Roth IRA?

Tax Implications of a Backdoor Roth IRA Roth IRA Income Limits: For 2023, if your MAGI is $153,000 ($161,000 in 2024) or higher and you’re single, or $228,000 ($240,000 in 2024) or higher and you’re married filing jointly or a qualifying widow or widower, then you can’t contribute to a traditional Roth IRA.

When to avoid a backdoor Roth IRA?

You may not need a backdoor Roth conversion if you are able to meet your savings goals with the maximum retirement limit through your workplace retirement account, and are not expecting a need for additional savings.

Can I do a backdoor Roth if I already have a traditional IRA?

If you already have a traditional IRA, there’s no reason you can’t use it for a backdoor Roth IRA conversion, but remember that the funds you have saved in it may impact the amount you owe in taxes.

Is a backdoor Roth IRA conversion right for You?

If your income is above the limit, a backdoor Roth might be a good solution for you. Here’s a step-by-step guide on how to do a backdoor Roth IRA conversion: Put money in a traditional IRA account. You might already have an account, or you might need to open one and fund it. » Ready to get started? See our list of the best IRA providers

Can I convert my inherited IRA to Roth?

Therefore when it comes to converting your own traditional IRA to Roth, an inherited IRA that isn’t yours is not included in the calculation for the percentage converted (the “pro-rata rule”). If you made the inherited IRA yours, then it will be included in the calculation. What if you want to convert the inherited IRA to Roth as well?

Can you make a backdoor contribution to a Roth IRA?

For example, let’s say you earn above the income thresholds for making a Roth IRA contribution and have $93,000 of pre-tax money already in a traditional IRA, and you want to make a Backdoor contribution to a Roth IRA account of $7,000.

Could a backdoor Roth IRA benefit high-income earners?

A backdoor Roth IRA could benefit high-income earners. A “backdoor Roth IRA” is just a name for a strategy of converting nondeductible contributions in a traditional IRA to a Roth IRA. The strategy can be helpful for those who earn too much to contribute directly to a Roth IRA.

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