Retirement & HSA

Backdoor Roth (Form 8606), SEP-IRA, HSA.

Preparer Priya Raman · due 2026-03-27

Reviewer Daniel Ortiz · due 2026-04-08

Partner Helen Strand

Backdoor Roth. Ngozi contributed 7,000 for 2024 on 02/12/2025 (D42) and 7,000 for 2025 (D43), converting both (14,026 with earnings, D41). Basis 14,000 covers the conversion 14,026, leaving 26 taxable. The client said "no prior basis" (qa-31); the 2024 Form 8606 shows 7,000 — the documents win. SEP. 18,000 deposited 04/10/2026 for 2025 (D26). The deduction is limited to 15,214; the rest is an excess contribution to fix with the custodian. HSA. Employer contributions 6,000 (W-2 code W) under the family limit; distributions 2,150 all for medical care (qa-29). California does not recognize HSAs and adds the 6,000 back.

Checks that don't trust the engine (2)

SEP-LIMIT · Retirement & HSA

SEP deduction limit after Schedule C corrections

Fails

Limit falls from 15,214 to about 13,674. The 18,000 deposited on 04/10/2026 (D26) leaves an excess of about 4,326: advise withdrawal before the due date to avoid the 6% excise (Form 5329).

Engine 15,214 · recomputed 13,674

How: 20% x (net profit - half SE tax). If the Schedule C findings are accepted, net profit is about 73,568, half SE tax about 5,197.

Authority: IRC 404(h), 404(a)(8)(C); IRC 4979

Evidence: D26 · D14 · Lines: Sch1.16

Sch1.16 15,214 → 13,674 — Limit recomputed on corrected net profit.
Tax: fed +477 · CA +65

Explain / dismiss instead

IRA-BASIS · Retirement & HSA

Backdoor Roth basis agrees to 2024 Form 8606

Agrees

Basis 7,000 (2024 contribution made 02/12/2025) + 7,000 for 2025 = 14,000; converted 14,026; taxable 26. The client's answer (qa-31: 'prior basis: none that I know of') is wrong - the documents win.

Engine 7,000 · recomputed 7,000

How: 2024 Form 8606 line 14 (D06 p10) and 2024 Form 5498 (D42); 2025 Form 5498 (D43) and 1099-R (D41).

Evidence: D41 · D42 · D43 · qa-31 · D06 · Lines: F8606.2, F8606.18

Documents (5)

D41	2025 Form 1099-R - Northlake Securities IRA (Ngozi Okafor) received 2026-02-15 · client · extracted	landed on the return	F1040.4a, F8606.8, SchCA540NR.4.E
D42	Form 5498 for 2024 - Northlake Securities IRA (Ngozi Okafor) received 2026-02-15 · client · extracted	landed on the return	F8606.2
D43	Form 5498 for 2025 - Northlake Securities IRA (Ngozi Okafor) received 2026-05-29 · client · extracted	landed on the return	F8606.1, F8606.6
D44	2025 Form 1099-SA - HSA (Ngozi Okafor) received 2026-02-15 · client · extracted	landed on the return	F8889.14a, F8889.15
D45	2025 Form 5498-SA - HSA (Ngozi Okafor) received 2026-02-15 · client · extracted	landed on the return	F8889.3, F8889.9

Every line in this area (23)

Show all 23 lines

F8606.1	Nondeductible contributions for 2025	7,000
F8606.2	Total basis in traditional IRAs (2024 Form 8606 line 14)	7,000
F8606.3	Add lines 1 and 2	14,000
F8606.5	Line 3 minus line 4	14,000
F8606.6	Value of traditional IRAs at 12/31/2025	0
F8606.8	Net amount converted to Roth	14,026
F8606.9	Add lines 6, 7, 8	14,026
F8606.10	Line 5 divided by line 9	0.9981
F8606.11	Nontaxable portion converted	14,000
F8606.13	Nontaxable portion of all distributions	14,000
F8606.14	Basis carried to 2026	0
F8606.16	Amount converted	14,026
F8606.17	Basis in amount converted	14,000
F8606.18	Taxable amount of conversion	26
F1040.4a	IRA distributions	14,026
F1040.4b	Taxable amount	26
F8889.3	HSA contribution limit (family)	8,550
F8889.9	Employer contributions (W-2 code W)	6,000
F8889.13	HSA deduction	0
F8889.14a	Total distributions	2,150
F8889.15	Qualified medical expenses paid	2,150
F8889.16	Taxable HSA distributions	0
Sch1.13	Health savings account deduction	0

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