December 31 matters because a Roth conversion counts in the year money actually leaves the Traditional IRA. A backdoor Roth is a nondeductible Traditional IRA contribution plus a Roth conversion, and that conversion must finish by December 31. That surprises many savers because the contribution step follows a later deadline. The two steps run on different clocks, so timing the second step decides which tax year reports the income.
Official resources:
- Read the original report from Irs — Use this primary source to review the complete report.
- Read the official guidance from Irs — Use this primary source to verify the official guidance.
Table of Contents
- Why conversion and contribution deadlines differ
- Can a January conversion count for last year?
- Why other IRA balances change the tax
- What to finish before December 31
Why conversion and contribution deadlines differ
A conversion counts as income when funds leave the Traditional, SEP, or SIMPLE IRA. According to the IRS in IRS IRA FAQs, the transfer must complete by December 31 to count for that tax year. A contribution works differently.
The IRS states in Publication 590-A that a contribution for a tax year may be made until the return due date. That due date is generally April 15 without extensions. For example, 2025 contributions were due April 15, 2026.
Can a January conversion count for last year?
LegalClarity explains in its conversion deadline guide that a conversion cannot be backdated to a prior year. Funds moved January 2 count as next-year income on the next-year return.
Assume you meant to convert in December but the money leaves January 2. That delay shifts the whole taxable event to the next year, even if the contribution was for the earlier year.
Why other IRA balances change the tax
The conversion is rarely tax-free when pre-tax money remains elsewhere. The IRS describes in Publication 590-B a pro-rata rule for these accounts. The rule treats Traditional, SEP, and SIMPLE IRAs as one pool, so each conversion mixes pre-tax and after-tax dollars.
The taxable amount turns on your December 31 balance. The math uses the combined value of Traditional, SEP, and SIMPLE IRAs on December 31 plus distributions. You report it on Form 8606 line 6 and related lines.
What to finish before December 31
December requests need extra processing time. Conversions from 2018 onward cannot be recharacterized, which means they cannot be undone.
Clear pre-tax balances before you convert. Then run the two backdoor steps in order: Both steps go on Form 8606 Nondeductible IRAs. The custodian also issues Form 1099-R for the distribution.
- Make the nondeductible Traditional IRA contribution.
- Convert promptly and leave time for funds to exit by December 31.
- Keep records to report both steps on Form 8606 and check the Form 1099-R.
