Announcement

Collapse
No announcement yet.

Messed up my Backdoor Roth conversion

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • Messed up my Backdoor Roth conversion

    So, in my usual fashion, I messed up what should have been an easy financial task. I decided to convert my Traditional to a Roth IRA today. The problem is the settlement date will be recorded as January 2, 2017 not December 30, 2016. Can anyone tell me what this means as far as 1) paperwork? Do I still file a simple 8606 by April 2017? and 2) Does this lead to problems when I submit another $5500 in January 2017 for 2017's backdoor contribution?

  • #2
    You're ok as long as you're talking about a non-deductible TIRA. You contributed to the TIRA for 2016 and you'll contribute to the 2017 TIRA next month. You'll just do an $11k conversion in 2017 rather than one each in 2016 and 2017.

    If, otoh, you are trying to clear out a pre-tax TIRA in order to avoid the pro-rata rule, afraid you're SOL. But I don't think that's what you're talking about since you're not a student :-).

    If my original assumption is correct, you'll file an 8606 for 2016 for the TIRA contribution (front of form) and an 8606 for 2017 for a TIRA contribution (front of form) and the conversion of the full $11k (back of form).

    Custodial firms are swamped with requests at the EOY. We cut our clients off at 12/22 - always good to handle anything time-sensitive before Christmas.
    Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

    Comment


    • #3




      You’re ok as long as you’re talking about a non-deductible TIRA. You contributed to the TIRA for 2016 and you’ll contribute to the 2017 TIRA next month. You’ll just do an $11k conversion in 2017 rather than one each in 2016 and 2017.

      If, otoh, you are trying to clear out a pre-tax TIRA in order to avoid the pro-rata rule, afraid you’re SOL. But I don’t think that’s what you’re talking about since you’re not a student :-).

      If my original assumption is correct, you’ll file an 8606 for 2016 for the TIRA contribution (front of form) and an 8606 for 2017 for a TIRA contribution (front of form) and the conversion of the full $11k (back of form).

      Custodial firms are swamped with requests at the EOY. We cut our clients off at 12/22 – always good to handle anything time-sensitive before Christmas.
      Click to expand...


      Thank you, as always, for your prompt reply.

      I'm still very new to this and some concepts are still unclear so I have questions.

      1) Had the settlement date been in 2016, would the conversion have counted as a deductible IRA transaction?

      2) Does the deductible, pre-tax TIRA become available in 2018? Basically, does everything "reset" the following year?

       

       

       

      Comment


      • #4


        1) Had the settlement date been in 2016, would the conversion have counted as a deductible IRA transaction? 2) Does the deductible, pre-tax TIRA become available in 2018? Basically, does everything “reset” the following year?
        Click to expand...



        1. No. A conversion is different from a "contribution" ("transaction" above). A conversion moves money from one kind of retirement account to another.

        2. Not sure I'm following you. As a physician, it's very unlikely you qualify to make a deductible pre-tax TIRA.


        Read the article I linked to and let me know if you have more questions. It is very possible I am just not on your wave length at the moment and someone else will step in and straighten me out ;-)
        Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

        Comment


        • #5
          jfoxcpacfp,

          So I'm younger than 70.5 and I have no retirement plan at work so I really screwed myself by missing the 2016 conversion, settlement date because what would have been deductible is no longer deductible. Is that correct?

           

          "

          • If you have no retirement plan at work and you're younger than 70 ½, you can put money in (up to the annual contribution limit) and deduct the entire amount from your taxes. (If your spouse doesn't work outside the home, he or she can also invest up to the federal limit and deduct the full amount.)"


           

          Comment


          • #6




            jfoxcpacfp,

            So I’m younger than 70.5 and I have no retirement plan at work so I really screwed myself by missing the 2016 conversion, settlement date because what would have been deductible is no longer deductible. Is that correct?

            If you have no retirement plan at work and you’re younger than 70 ½, you can put money in (up to the annual contribution limit) and deduct the entire amount from your taxes. (If your spouse doesn’t work outside the home, he or she can also invest up to the federal limit and deduct the full amount.)”
            Click to expand...


            So your spouse does not have a company plan, either? If that's the case, you can both make a deductible IRA contribution up until 4/18/17 as long as you earned $11k combined. The conversion is irrelevant. Quit saying you screwed yourself. You procrastinated but all it did was raise your b.p.
            Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

            Comment


            • #7
              I'm single so no spousal, retirement plan to consider.

              Re raised blood pressure, LOL. Okay. I can calm down now that you've put it all into perspective.

              Thanks for all your help during my brief time on WCI.

               

               

              Comment

              Working...
              X