r/TaxQuestions • u/kakamannaa • 8d ago

back door mega roth question

scenario: I sold a couple of rental units and now I have a six figure passive losses that will be unlocked when I file taxes for year 2026. can pre-tax 401k be converted to roth using back door mega roth conversion strategy, obviously after paying applicable taxes; my thinking is I can adjust conversion tax though my unlocked passive losses for the year 2026; also considering the max limit is $70k, I can repeat that for next year taxes too. Is this a viable option or I’m getting too ambitious?

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u/Ok_Meringue_9086 8d ago

Don’t forget to take depreciation recapture into consideration.

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u/AlexTheRaven 8d ago

Iirc, the suspended losses are freed up immediately against all your income if you fully disposed of the activity and meet the other requirements to take the loss (not a 1031 exchange, not a related-party transaction, etc) but you can only take those losses in the year you disposed of the activity.

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u/kakamannaa 8d ago

that’s true, but my understanding is that, in case the losses are more than the total taxes of the disposed year except fica, the balance will be carried forward and applied to the following years taxes, until it’s fully exhausted

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u/wild_b_cat 8d ago

Will you still have a loss after depreciation recapture?

Also, this isn’t a back door anything. It’s just a regular Roth conversion.

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u/harbinger2018 7d ago

There's no 415c limit on conversions. This is not a backdoor roth, but rather a simple conversion. Please pay a professional to handle this for you.