The formulas
- Line 3 = line 1 + line 2; line 5 = line 3 - line 4
- Line 9 = year-end IRA value + distributions + conversions
- Line 10 = line 5 / line 9, three decimals, not above 1.000
- Line 11 = conversion x line 10; line 18 = conversion - line 11
- Line 14 = line 3 - (line 11 + line 12)
How it works
Form 8606 treats all your traditional, SEP and SIMPLE IRAs as one pool. The nontaxable share of a conversion equals your basis divided by the pool, measured with the December 31 value plus the year's distributions and conversions. Pre-tax money anywhere in the pool makes part of a backdoor conversion taxable.
The line numbers follow the 2025 Form 8606, the latest form posted; the computation is the same for 2026. The 2026 IRA contribution limit is $7,500 ($8,600 at age 50 or older) per Notice 2025-67. Rolling pre-tax IRA money into an employer plan before December 31 removes it from line 6.
Illustrative figures only. Check the result against your firm's methodology before relying on it.
Common questions
Does my 401(k) count in the pool?
No. Only traditional, SEP and SIMPLE IRAs count on line 6.
Why does the year-end balance matter if I converted in January?
Form 8606 measures the pool at December 31 of the conversion year, so later contributions or rollovers into IRAs change the result.
Where does the leftover basis go?
Line 14 carries forward and becomes line 2 next year.
Sources
- IRS Form 8606 (2025), Nondeductible IRAs
- IRS Notice 2025-67, 2026 amounts relating to retirement plans and IRAs
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