Post-tax Traditional IRA contributions - what are my next steps for retirement planning?

Your understanding of the situation is mostly correct. Let me clarify a few points: With post-tax contributions to a Traditional IRA that you've tracked with Form 8606, you've established what's called your "basis" in the IRA. When you eventually take distributions, a portion of each withdrawal will be considered a return of your basis (tax-free) and a portion will be considered taxable income. This is determined by the pro-rata rule. The earnings on your post-tax contributions will not be tax-free - they'll be taxed as ordinary income when withdrawn, just like the rest of your pre-tax money. There's no way to separately track the growth of specific contributions. For the backdoor Roth option, you're right about the pro-rata rule making this less attractive with your existing pre-tax IRA balance. However, one option you might consider: Does your current employer's 401k plan accept rollovers from IRAs? If so, you could potentially roll your pre-tax IRA funds into your workplace 401k, leaving only your post-tax contributions in the IRA, which you could then convert to Roth with minimal tax impact.

I was in a similar situation last year and found a solution through https://taxr.ai that really helped me understand my options with post-tax IRA contributions. Their system analyzed my contribution history and tax forms, then explained exactly how the pro-rata rule would affect me based on my specific numbers. I actually discovered I had been filling out Form 8606 slightly wrong for a couple years (easy mistake to make), and they showed me how to correct it. They also ran some projections comparing different strategies - keeping everything as-is versus doing partial conversions versus the 401k rollover approach that the previous commenter mentioned. What was really helpful was seeing the tax implications laid out year by year under different scenarios. Made it much easier to decide what was best for my situation.

I tried taxr.ai after seeing the recommendation here, and it was seriously helpful. I've been making post-tax contributions to my Traditional IRA for 4 years while being over the income limits, and I was really confused about my options. The tool confirmed I'd been filling out Form 8606 correctly (what a relief!), and showed me exactly how much tax I'd pay if I did a full Roth conversion now versus waiting. The most valuable part was seeing how the pro-rata calculations would work in different scenarios. I ended up going with the strategy of rolling my pre-tax IRA funds into my employer's 401k, then converting just my post-tax IRA contributions to Roth. Had to pay a tiny bit of tax on the earnings, but now I can do clean backdoor Roth contributions going forward without worrying about pro-rata complications. Wish I'd known about this approach years ago!

If you're having trouble getting through to the IRS to confirm your basis tracking is correct (which I definitely was), I'd recommend https://claimyr.com to actually get a human on the phone. You can see how it works here: https://youtu.be/_kiP6q8DX5c I spent literally HOURS trying to get through to the IRS to ask questions about my Form 8606 history and kept getting disconnected. Claimyr got me connected to an actual IRS agent in about 30 minutes. The agent was able to pull up my past returns and confirm my basis tracking was correct, which gave me peace of mind before making decisions about conversions. This might be especially helpful in your case since you've been making post-tax contributions for several years and want to make sure your records match what the IRS has on file.

I was completely skeptical about Claimyr, but I tried it out of desperation after my 5th failed attempt to reach the IRS about my post-tax IRA contribution history. I honestly can't believe how well it worked. The system called me back in about 45 minutes when they reached an IRS representative. I explained my situation with the post-tax contributions and Form 8606 concerns. The agent was able to confirm my basis amount from my previous tax returns and clarified exactly how to handle the partial Roth conversion I was planning. This completely changed my retirement strategy - I found out I had actually been OVER-reporting my basis by about $4,000 due to a misunderstanding about how rollovers are reported. Getting accurate information directly from the IRS before making conversion decisions potentially saved me from a serious headache during an audit.

One option you haven't mentioned is seeing if your employer offers a Mega Backdoor Roth. If your 401k plan allows after-tax (non-Roth) contributions beyond the standard employee deferral limit AND allows in-plan conversions or in-service withdrawals, you could potentially contribute a lot more to Roth accounts that way without worrying about your existing IRA balances. The contribution limits are much higher - potentially up to $46,500 for 2025 depending on your employer's plan and your standard 401k contributions. This would let you build up Roth assets without having to deal with your current Traditional IRA situation at all.

has anyone used the "split" approach? im in a similar spot (43, planning to retire at 62) and ive been doing half my contributions as post-tax trad ira and half as normal taxable brokerage investments. my thinking is that this gives me more flexibilty later - i can tap the brokerage account with just capital gains tax before 59.5, and i know exactly what my basis is.

Something nobody's mentioned yet - if you have self-employment income (even from a side gig), you could open a Solo 401k and roll your pre-tax IRA money into that. Then you'd be able to do clean backdoor Roth conversions with your post-tax IRA contributions. I did this last year when I was consulting on the side, and it worked perfectly. The Solo 401k can often have better investment options than an employer 401k too, since you get to choose the provider. I went with Fidelity and have access to all their low-cost index funds with no admin fees.

Great breakdown of your situation! You're absolutely right about the pro-rata rule making backdoor Roth conversions less attractive with your current mix. A few additional thoughts: Since you're 42 with 20 years until retirement, you might consider doing small annual Roth conversions during years when your income is lower (job changes, sabbaticals, etc.). Even though you'd pay tax on 85% of each conversion, spreading it over multiple years could keep you in lower tax brackets. Another angle to consider: if you expect to be in a lower tax bracket in retirement, keeping the Traditional IRA as-is might actually be optimal. You'd continue tracking basis with Form 8606, and your future withdrawals would be partially tax-free based on the pro-rata rule you mentioned. For the earnings question - no, earnings on your post-tax contributions are not tax-free when withdrawn. Only your actual post-tax contribution amounts (your basis) come out tax-free. The IRS treats all earnings as taxable regardless of which contributions generated them. The 401k rollover strategy others mentioned is solid if your plan allows it, but make sure to factor in any differences in investment options and fees when deciding if it's worth it.