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Backdoor roth mistake regarding marital finances

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  • Backdoor roth mistake regarding marital finances

    I did a successful backdoor roth IRA via vangaurd Jan 1 in my normal account. I got married last year and my lawyer advised me to keep all post marriage investments in a completely separate account(no prenup). I was not thinking and just put it into my old vanguard account. I spoke to my lawyer again who recommended i take my contributions out and place it in a diff account.

    "Unfortunately" my 6k grew to about 7k. I called vanguard and i signed some forms and ( i dont know the correct term) but they took out the 6k and just said i needed to fill out form 8606 next year. However, the 1K is still in my roth IRA. How do i get it out? They told me all of it would move out but the 1k is still there. I know i will have to pay taxes on it or something. I just need all post marital investments out of this IRA.

    Any help would be great.

  • #2
    So you transferred your Roth contribution to a new Roth, sounds ok to me. Why not the growth? Or did VG have you recharacterize back to a TIRA? That doesn’t sound logical (to me) - why would that be necessary?

    What are you supposed to do with your premarital investments? Typically, the issue in these situations is to avoid commingling your premarital rather than your postmarital assets.

    Sorry, guess I need a Dummies’ Guide to this one.
    Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087


    • #3
      Who is on first? A divorce attorney?


      • #4
        well now I feel stupid. I thoroughly explained to my lawyer and the vanguard rep and non just recommended moving 7k Roth IRA to a different Roth IRA fidelity account. I should have posted here first .

        Whats done is done I believe and I converted the Roth IRA back to "regular" money. They sent the money back to my checking account but only sent the 6K contributions. I still have the 1k sitting in my Roth IRA. Did I I make a huge mistake?


        • #5
          Yes it was a big mistake, but it is recoverable. If you have not done an IRA - IRA rollover within the last twelve (12) months and it is < 60 days from the date you received the Roth IRA distribution. You can rollover the $6K back into the Roth IRA as long as it is received < 60 days from the date you received it.

          You will report the $6K rollover on your 2022 Form 1040 Line 4a and $0 taxable on Line 4b. All will be as if you never took the distribution, except for any missed gains/losses.

          *Roth conversions does not apply. Only traditional - traditional and Roth - Roth rollovers.


          • #6
            Ok Thank you for your help!

            I will call vanguard and have them help me with this.

            But just to clarify, I should try and get the 6K back into my vanguard Roth IRA. After getting it back into my vanguard Roth IRA, I should try and move the 6k+1K in gains into my new fidelity Roth IRA?

            That seems logical to me