I think I'm ready to start doing Backdoor Roth IRA's this year. Let me know if this sounds like a good plan, or if you see any errors in what I'm thinking of doing. I figure a question on here is cheaper than hiring an accountant
. For context: I make 210k in W2 income and expect to make 120k or more in 1099 income. I max out employee contributions to the TSP (federal employee version of 401k) and have around 9k in a SEP-IRA at Vanguard from last year.
As I understand it, I need to roll the SEP into a solo-401k (thinking of opening one at Fidelity since apparently Vanguard doesn't accept rollovers) to avoid the pro-rata problem. I'd then close the SEP because I have to have a traditional IRA to convert into a Roth and wouldn't want a SEP anymore. I would then open the traditional IRA and fund it with $5,500 and shortly thereafter open a Roth IRA and move the $5,500 into the Roth account, keeping both the traditional (with a zero balance) and the Roth for next year's backdoor conversion. Does that sound correct?
Where should I open the traditional and Roth IRAs? My default would be Vanguard unless there's a reason to do elsewhere.
Also, does putting the $5,500 into the traditional IRA and converting to Roth have any effect on the limit of how much I can put into my solo-401k? I just wanna make sure I'm not missing anything. Thanks!!

As I understand it, I need to roll the SEP into a solo-401k (thinking of opening one at Fidelity since apparently Vanguard doesn't accept rollovers) to avoid the pro-rata problem. I'd then close the SEP because I have to have a traditional IRA to convert into a Roth and wouldn't want a SEP anymore. I would then open the traditional IRA and fund it with $5,500 and shortly thereafter open a Roth IRA and move the $5,500 into the Roth account, keeping both the traditional (with a zero balance) and the Roth for next year's backdoor conversion. Does that sound correct?
Where should I open the traditional and Roth IRAs? My default would be Vanguard unless there's a reason to do elsewhere.
Also, does putting the $5,500 into the traditional IRA and converting to Roth have any effect on the limit of how much I can put into my solo-401k? I just wanna make sure I'm not missing anything. Thanks!!
Comment