I currently have a standard IRA that I rolled over from my residency training two years ago. The value wasn't very much, so I gambled and put in all in Apple stock. It worked out well. BUT - now the value is almost 40K and it is preventing me from opening up the back door.
If I want to contribute to a Roth via the backdoor in the future (and for the forseable future until they amend the tax code) then I would need to convert that regular IRA account to a Roth. That is a taxable event. I assume this would be a smart move since I am youngish at 34 years old and I would hopefully have 20+ years of backdoor conversions.
My question is what will be the taxes on that 40K to convert it. Will I pay regular income tax on the initial rolled over balance and then long term capital gains on the value increase? Or, do I have to pay full income tax on the entire thing?
Assume the current value is 40K, with 25K being the initial investment and 15K gains over the past two years. My income tax bracket is 35%. How much is it going to cost me to open up the backdoor?
If I want to contribute to a Roth via the backdoor in the future (and for the forseable future until they amend the tax code) then I would need to convert that regular IRA account to a Roth. That is a taxable event. I assume this would be a smart move since I am youngish at 34 years old and I would hopefully have 20+ years of backdoor conversions.
My question is what will be the taxes on that 40K to convert it. Will I pay regular income tax on the initial rolled over balance and then long term capital gains on the value increase? Or, do I have to pay full income tax on the entire thing?
Assume the current value is 40K, with 25K being the initial investment and 15K gains over the past two years. My income tax bracket is 35%. How much is it going to cost me to open up the backdoor?
Comment