Alright, I've got a situation that is just unique enough that the large number of generic website FAQs can't seem to answer for me.
Here's the situation:
I contributed (appropriately) to a Roth in 2015. In 2016, as I transitioned to full time attending, my gross income crossed the threshold for direct Roth contributions, so I could no longer make a direct Roth deposit. However, since I am lazy and forgetful, I did not make a contribution of any kind during the 2016 months. So, last week, I opened a brand new traditional IRA for a non-deductible deposit of $5,500 (with plans to convert later to Roth). Fortunately, this T-IRA contribution still counts toward my 2016 allowance. Perfect, that's done with.
Now, I will plan to also dump another $5,500 into this same account in the near future to account for my 2017 non-deductible contribution, making the account value $11,000. This is all money that has already been taxed, mind you. If I am understanding everything correctly, I can convert all of this $11,000 to my Roth.
This then creates the following scenario:
-Fill out 8606 form to document the initial $5,500 (2016 contribution). Since conversions are actually counted on the date of conversion, I will not make any mention on the 8606 form this year about conversion.
-Next year, I will fill out an 8606 form reporting the second $5,500 (2017 contribution) and then I will also report the entire $11,000 conversion on that form.
Here are the questions: In theory, I've paid taxes on all this money, so shouldn't have to worry about it after conversion. I am aware of the pro-rata rule, so want to make sure I avoid any additional taxes.
As of right now, the other retirement money I have stocked up at this point is money that has gone toward the 403b and 457b offered by my non-profit organization. I do not have any other older retirement accounts or any pre-tax savings that have been rolled over to an IRA. I have maximized my contributions to both of these plans for 2016 ($18,000 to each). Are these two plans in themselves considered IRAs and do I need to worry about the money in these plans affecting the pro-rata rule for Roth conversion??
From what I can tell, these non-profit sponsored plans are not considered part of a traditional IRA, but all the money in them came from from my paycheck before any taxes were applied, so I'm not aware of the finer details.
Hopefully this makes sense. I just want to convert $11,000 to my Roth and not pay any more taxes. Am I in the clear?
Thanks
Here's the situation:
I contributed (appropriately) to a Roth in 2015. In 2016, as I transitioned to full time attending, my gross income crossed the threshold for direct Roth contributions, so I could no longer make a direct Roth deposit. However, since I am lazy and forgetful, I did not make a contribution of any kind during the 2016 months. So, last week, I opened a brand new traditional IRA for a non-deductible deposit of $5,500 (with plans to convert later to Roth). Fortunately, this T-IRA contribution still counts toward my 2016 allowance. Perfect, that's done with.
Now, I will plan to also dump another $5,500 into this same account in the near future to account for my 2017 non-deductible contribution, making the account value $11,000. This is all money that has already been taxed, mind you. If I am understanding everything correctly, I can convert all of this $11,000 to my Roth.
This then creates the following scenario:
-Fill out 8606 form to document the initial $5,500 (2016 contribution). Since conversions are actually counted on the date of conversion, I will not make any mention on the 8606 form this year about conversion.
-Next year, I will fill out an 8606 form reporting the second $5,500 (2017 contribution) and then I will also report the entire $11,000 conversion on that form.
Here are the questions: In theory, I've paid taxes on all this money, so shouldn't have to worry about it after conversion. I am aware of the pro-rata rule, so want to make sure I avoid any additional taxes.
As of right now, the other retirement money I have stocked up at this point is money that has gone toward the 403b and 457b offered by my non-profit organization. I do not have any other older retirement accounts or any pre-tax savings that have been rolled over to an IRA. I have maximized my contributions to both of these plans for 2016 ($18,000 to each). Are these two plans in themselves considered IRAs and do I need to worry about the money in these plans affecting the pro-rata rule for Roth conversion??
From what I can tell, these non-profit sponsored plans are not considered part of a traditional IRA, but all the money in them came from from my paycheck before any taxes were applied, so I'm not aware of the finer details.
Hopefully this makes sense. I just want to convert $11,000 to my Roth and not pay any more taxes. Am I in the clear?
Thanks
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