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Easiest platform for Backdoor Roth conversion?

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  • Easiest platform for Backdoor Roth conversion?

    My current institution is a pain in the ****************** to convert annual TIRA contributions to "backdoor" Roth IRA. I have to create a new TIRA each year, fill out a form, submit it to their general documents people, let them process it, and they empty it and close the account each time. I'm not the biggest fan of their investments, either. I'll probably switch for the upcoming year.

    I know Vanguard has a pretty simple option built in. I like theirs and Fidelity's funds. What are your experiences with your institution and making the "backdoor" Roth IRA contributions?

  • #2
    I use Vanguard and it's simple (complete with tutorial: https://www.whitecoatinvestor.com/backdoor-roth-ira-tutorial/)

    Every January, I make the $5500 contribution to a traditional IRA for my spouse and myself. Then I perform the conversion as detailed above. We use a simple 3 fund portfolio within the Roth IRA

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    • #3
      I find Fidelity and eTrade not too bad. With Fidelity you can do pretty much all the conversions online.

      The only time I needed to call or fill out forms is if I need to do recharacterizations as sometimes that gets tricky.

      But overall I haven't had much issues with either of them.

      Good luck!

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      • #4
        A dumb question - when u convert the money from vanguard TIRA into backdoor ROTH, does it go into money market fund first, then you decide which mutual funds to invest ?

         

         

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        • #5




          A dumb question – when u convert the money from vanguard TIRA into backdoor ROTH, does it go into money market fund first, then you decide which mutual funds to invest ?
          Click to expand...


          You can either convert "in kind" (move the actual investments) or liquidate (sell) all and move to a MMA, then purchase a new portfolio.
          Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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          • #6
            got it...wish me luck..i am going to vanguard now to press the button 'convert to roth'...

            hope i dont screw up with the tax end. LOL

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            • #7




              got it…wish me luck..i am going to vanguard now to press the button ‘convert to roth’…

              hope i dont screw up with the tax end. LOL
              Click to expand...


              Here's the deal: you have until 10/15/17 to recharacterize. That means if you change your mind for any reason, you can move all or part of it back to the original IRA it came from. So you basically can't screw up.
              Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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              • #8
                Mine is at vanguard, super easy, and they don't remove the empty TIRA after the conversion

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                • #9




                  A dumb question – when u convert the money from vanguard TIRA into backdoor ROTH, does it go into money market fund first, then you decide which mutual funds to invest ?

                   

                   
                  Click to expand...


                  for Vanguard yes.

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                  • #10




                    Mine is at vanguard, super easy, and they don’t remove the empty TIRA after the conversion
                    Click to expand...


                    +1 for simplicity @ Vanguard.

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                    • #11
                      If doing "in-kind" conversions and you THINK there's a chance you'll recharacterize later, put it in a SEPARATE Roth to keep things clean. If you want you can also split the different "in-kind" holdings based off sector. This way if one group went down and don't want to pay the tax on gains that are no longer there you can just recharacterize those and leave the others alone.

                      In the future once the recharacterization window passes you can also consolidate into a single Roth later, but to make your life easier keep it separate when you first convert.

                      Good luck!

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                      • #12
                        I hold mostly Vanguard's funds in there anyway.  Might as well trade them for free.

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                        • #13







                          A dumb question – when u convert the money from vanguard TIRA into backdoor ROTH, does it go into money market fund first, then you decide which mutual funds to invest ?
                          Click to expand…


                          You can either convert “in kind” (move the actual investments) or liquidate (sell) all and move to a MMA, then purchase a new portfolio.
                          Click to expand...


                          You typically cannot do Roth conversions in kind. It might not even be legal. I've always had to liquidate and move cash. But since there is no tax cost to the transaction, it's no big deal to liquidate and buy the same thing again.
                          Helping those who wear the white coat get a fair shake on Wall Street since 2011

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                          • #14




                            My current institution is a pain in the ****************** to convert annual TIRA contributions to “backdoor” Roth IRA. I have to create a new TIRA each year, fill out a form, submit it to their general documents people, let them process it, and they empty it and close the account each time. I’m not the biggest fan of their investments, either. I’ll probably switch for the upcoming year.

                            I know Vanguard has a pretty simple option built in. I like theirs and Fidelity’s funds. What are your experiences with your institution and making the “backdoor” Roth IRA contributions?
                            Click to expand...


                            What the heck is your current institution and why? Time to move it sounds like to me.

                            Betterment is probably the easiest. They have a "Backdoor Roth IRA" button. But Vanguard is pretty darn easy and a great place for Roth IRAs in my opinion.
                            Helping those who wear the white coat get a fair shake on Wall Street since 2011

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                            • #15


                              You typically cannot do Roth conversions in kind. It might not even be legal.
                              Click to expand...


                              Whatever gave you that idea? We do it all the time. Just Google it if you don't believe me.
                              Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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