Transfer process to allow backdoor Roth option


Q. I am a federal employee with a TSP (Traditional). In addition, I currently own a Traditional IRA and a Roth IRA, while my wife owns a Roth IRA.

This year, it looks like our combined income (MAGI) will likely exceed the threshold for the standard approach to contribute to our Roth IRAs. I have seen strategies to use the backdoor approach, but it will require smartly transferring my traditional IRA to TSP to avoid a large conversion taxes.

My traditional IRA has a nondeductible basis of $12,000 and $78,000 of earnings. As I understand from research, I could transfer the $78,000 of untaxed earnings of the IRA into my TSP. Then I could convert the remaining amount $12,000 into a Roth IRA. Once that is complete, I could open a new traditional IRA to place my annual contribution and then use the backdoor approach to convert it into the Roth IRA. Is this approach accurate?

A. You should consult your tax preparer before you proceed, but this should work. You may transfer an amount from a Traditional IRA to your TSP account and “deem” it to be pre-tax money. This allows you to leave only the post-tax money in your Traditional IRA, which could then be converted to a Roth IRA without any tax consequences. If you are audited, you will need to prove that you did all of this correctly, so be careful.


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Mike Miles is a Certified Financial Planner licensee and principal adviser for Variplan LLC, an independent fiduciary in Vienna, Virginia. Email your financial questions to and view his blog at

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