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detailed backdoor roth conversion question

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  • detailed backdoor roth conversion question

    My wife has about 300k in traditional ira. She is a very high earner. I just (4/17/2107) did her taxes and put 5,500 into her traditional ira for 2016 tax year. This is a post-tax. I was planning on rolling it over into a roth ira.

    A) Can I do the backdoor roth conversion for that $5500 I just put in in a few days or is it too late?

    B) Along those same lines, can I next week go and put 5500 towards her 2017 traditional ira and then do a backdoor roth a few days afterwards?

    C) As long as I get rid of her 300k traditional ira by rolling it into a 401k by the end of this year (dec 31, 2017) will I avoid complicated tax penalties right?


  • #2

    1. Yes you can and, no, it is never too late. You will report the original contribution on your 2016 taxes (page 1, form 8606) and the conversion on your 2017 taxes (page 2, form 8606).

    2. Yes. You will report both on your 2017 form 8606.

    3. Yes. If, for some reason, you don't manage to roll her $300k pre-tax TIRA into a 401k by 12/31, you will need to "recharacterize" both Roth conversions or you will owe tax (not penalties) under the pro-rata rule.

    Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087