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  • Rollover IRA

    My wife has a rollover IRA (about $10k) from a previous 401k.  This is complicating our planned backdoor Roth.  I think we are going to do a Roth conversion of her rollover IRA and pay the taxes (about 40% federal and state combined).  Then going forward we can do annual backdoor Roths.  She is a stay at home mom now so there is no reverse rollover option for her.

    Does this seem reasonable?  I posted recently about a similar issue for me but I am able to do a reverse rollover into my new 401k profit sharing plan.  I didn't think about the backdoor Roth issues when we opened these rollover IRAs.

  • #2
    Sounds reasonable to me. At one time, there was some chatter about closing the loophole for the backdoor Roth IRA, but with the new administration coming to DC, this seems less likely in the near term. I might wait until 2017 to do the conversion. Taxes are unlikely to be higher next year...

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    • #3
      Yes, for only $10k, roll over and be done with it. Must complete before 12/31 if you want to do a backdoor Roth for 2016.
      Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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      • #4




        Yes, for only $10k, roll over and be done with it. Must complete before 12/31 if you want to do a backdoor Roth for 2016.
        Click to expand...


        Johanna, I have a question. I know you can make IRA contributions for 2016 up until April 2017. Does that apply to a backdoor Roth as well?

         

        For example, lets say I make a non-deductible Traditional IRA contribution (for 2016) on 2/1/17 and convert it to a backdoor Roth on 2/2/17. Then make another non-deductible Traditional IRA contribution (now for 2017) on 2/3/17 and convert it to a backdoor Roth on 2/4/17. Is that legal?

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        • #5







          Yes, for only $10k, roll over and be done with it. Must complete before 12/31 if you want to do a backdoor Roth for 2016.
          Click to expand…


          Johanna, I have a question. I know you can make IRA contributions for 2016 up until April 2017. Does that apply to a backdoor Roth as well?

          For example, lets say I make a non-deductible Traditional IRA contribution (for 2016) on 2/1/17 and convert it to a backdoor Roth on 2/2/17. Then make another non-deductible Traditional IRA contribution (now for 2017) on 2/3/17 and convert it to a backdoor Roth on 2/4/17. Is that legal?
          Click to expand...


          Yes, that is "kosher". TIRA contributions can be made for a tax year up until the due date (extensions not included) of that year's tax returns. Conversions are reported on a calendar year basis only, so it is a bit confusing.

          Here is how it would be reported:

          1. TIRA contribution $5,500 on 2016 tax return, reported on form 8606

          2. TIRA contribution $5,500 on 2017 tax return, reported on form 8606

          3. Roth conversion $11,000 on 2017 tax return, reported on pg 2 of same 2017 8606

          Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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