Employer solo 401k to backdoor Roth

[itoh]

Can you convert solo 401k directly to Roth ( via backdoor Roth ) ?

Lets say you combined 3 sep IRAs, each 10k = so total 30k into solo 401k. All preTax.

Can you convert all 30k into Roth IRA , or just 5500 and the rest sitting in 401k.

Thanks

[jfoxcpacfp]

You can convert a SOLO-k directly to a Roth. That is not a backdoor Roth, which is a method of contributing to a Roth when your income is too high to allow a direct contribution.

The $5,500/yr limitation is on IRA contributions. This is where the backdoor Roth comes into play. Since you are a physician, I will presume you make too much $$ to be able to contribute directly to a Roth IRA. Therefore, you must contribute to a nondeductible IRA and then convert into a Roth IRA. This is the back door maneuver.

[DMFA]

Conversions do NOT equal contributions.  You'll just have to pay income tax on anything that hasn't yet been taxed.  That's usually what limits the amount people like to convert at once.  $30,000 of conversions (untaxed to taxed) will probably cost you around $7,500 to $12,000 or so depending on your bracket.  If your income is variable, such as if you're a student or resident, whatever year your income is lowest is the best time to convert because it will be taxed a lower bracket.

Contributions came from your own non-invested cash.  That's where the $5,500/yr limit is.  It's the "backdoor" because you contributed it to a Traditional IRA and then converted it to a Roth.  If done properly (no Trad, SEP, or SIMPLE IRAs so as to avoid pro rata rule - this is just IRAs, not 401k), you've already paid tax on the contribution, which means there's no tax on the conversion (taxed to taxed).