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  • #31
    Originally posted by Peter1
    To confirm, you would only do a backdoor Roth IRA if you know for sure your income at retirement will be less than what it is now?
    For example, if my income is 300K now, then there would be no point in a Backdoor Roth IRA if at retirement I would be making less than 300K? How do you know for sure what the future holds with income at retirement?
    We have hashed this out so many times...I disagree with conventional wisdom on this. There are more reasons to decide whether to contribute to a Roth than "expected" tax bracket in retirement. Plans change, lives change. I happen to believe Roth IRAs are one of the great, legal, CYA tax dodges of all time.
    Last edited by jfoxcpacfp; 01-27-2021, 12:41 PM. Reason: moved a comma
    Our passion is protecting clients and others from predatory advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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    • #32
      Originally posted by Peter1
      To confirm, you would only do a backdoor Roth IRA if you know for sure your income at retirement will be less than what it is now?
      -- no, you perform a bdrIRA every time.

      Originally posted by Peter1
      For example, if my income is 300K now, then there would be no point in a Backdoor Roth IRA if at retirement I would be making less than 300K? How do you know for sure what the future holds with income at retirement?
      - your income has no bearing on the decision to fund a rIRA, only the method for which you do it.

      does that make sense?

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      • #33
        Hey all. Did our first backdoor roth for wife and I's accounts. Got our 1099-Rs and will be using Turbotax. In 2019 I overcontributed to 401k by a few hundred dollars (lost track between job switches). I contacted vanguard they distributed the money back to me and was told that I would be sent a 1099-R that would reflect and show that "untaxed overcontribution" that was given back to me. Is it a separate 1099-R that they send to me? It looks like the 1099 R sent only reflects the backdoor ROTH. Will this also change how I do my backdoor roth and input my 1099 R in turbotax? Thanks

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        • #34
          Originally posted by standupguy View Post
          Hey all. Did our first backdoor roth for wife and I's accounts. Got our 1099-Rs and will be using Turbotax. In 2019 I overcontributed to 401k by a few hundred dollars (lost track between job switches). I contacted vanguard they distributed the money back to me and was told that I would be sent a 1099-R that would reflect and show that "untaxed overcontribution" that was given back to me. Is it a separate 1099-R that they send to me? It looks like the 1099 R sent only reflects the backdoor ROTH. Will this also change how I do my backdoor roth and input my 1099 R in turbotax? Thanks
          the 2019 tax year is already passed, so that should have been filed last year.
          But yes, it otherwise is separate.

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          • #35
            I'm sure this answer exists somewhere but there is some much info to sift through, so I'll ask again:
            I opened a traditional IRA and started making investments in it without reading about how to do a backdoor Roth beforehand. I have made my 6k contribution for 2020 but now the portfolio has increased to $8600. I know I need to convert the total to a Roth and will owe taxes on the gains but do I first need to sell the investments and move over the cash or just move over the investments (I use ETrade)?

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            • #36
              Originally posted by PCCM View Post
              I'm sure this answer exists somewhere but there is some much info to sift through, so I'll ask again:
              I opened a traditional IRA and started making investments in it without reading about how to do a backdoor Roth beforehand. I have made my 6k contribution for 2020 but now the portfolio has increased to $8600. I know I need to convert the total to a Roth and will owe taxes on the gains but do I first need to sell the investments and move over the cash or just move over the investments (I use ETrade)?
              you can move the investments (rather youll buy the same ones in the rIRA) if you want.

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              • #37
                Originally posted by Peter1

                Sorry, newbie question, is it too late to open, convert, and fund a Backdoor Roth IRA now for 2020?
                Did you read through the first post in this thread? "– When can I do 2021? Until 2022 April tax day. Lump sum, lump convert immediately."

                If you subtract a year from each of the two times listed above, you'll find that you have until tax day in April, 2021, to take care of your back door Roth for 2020. Do it sooner than later, since it can take a while for deposits to settle.

                Please read the rest of Peds' excellent post to avoid other all too common problems.

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                • #38
                  Originally posted by Peter1

                  Sorry, newbie question, is it too late to open, convert, and fund a Backdoor Roth IRA now for 2020?
                  You have until April 15th of year+1 to contribute to an IRA for any year in which you have adequate earned income. You have until the end of your life to convert from a TIRA to a Roth IRA.

                  The process is: open, contribute, convert.
                  Our passion is protecting clients and others from predatory advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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                  • #39
                    this'll be the last time I do this because I can't sort it out but I think the answer is I need to resubmit my wife's 2019 8606 form, right?

                    Scenario: In spring 2020 we contributed $8500 to my wife's IRA, of which $2500 counted for 2019 and $6000 counted for 2020 (if it's worth knowing, in 2019 we contributed $3500 to her IRA and converted). Vanguard's 2020 1099-R for her says the gross distribution is $8500 and the taxable amount is $8500 and the distribution code is 2. She had a $0 balance in her IRA on Dec 31, 2019 and Dec 31, 2020. I converted the entire $8500 over the next day or two (the distribution amount is really $8500.32 so the market went up but clearly we're not paying tax on 32 cents since that rounds down).

                    I'm doing this in freetaxusa.com and having trouble figuring this out. Her 2019 8606 form I'm sure is correct: line 1 is $3500, line 2 is $0, line 3 is $3500, line 5 is $3500, line 13 is $3500, lines 14-15c are $0, and 16 and 17 are $3500.

                    So for 2020 8606 part 1, line 1 should be 6000, line 2 should be 2500, and line 3 8500? Or do I need to do something on her 2019 8606 form?

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                    • #40
                      Originally posted by JBME View Post
                      this'll be the last time I do this because I can't sort it out but I think the answer is I need to resubmit my wife's 2019 8606 form, right?

                      Scenario: In spring 2020 we contributed $8500 to my wife's IRA, of which $2500 counted for 2019 and $6000 counted for 2020 (if it's worth knowing, in 2019 we contributed $3500 to her IRA and converted). Vanguard's 2020 1099-R for her says the gross distribution is $8500 and the taxable amount is $8500 and the distribution code is 2. She had a $0 balance in her IRA on Dec 31, 2019 and Dec 31, 2020. I converted the entire $8500 over the next day or two (the distribution amount is really $8500.32 so the market went up but clearly we're not paying tax on 32 cents since that rounds down).

                      I'm doing this in freetaxusa.com and having trouble figuring this out. Her 2019 8606 form I'm sure is correct: line 1 is $3500, line 2 is $0, line 3 is $3500, line 5 is $3500, line 13 is $3500, lines 14-15c are $0, and 16 and 17 are $3500.

                      So for 2020 8606 part 1, line 1 should be 6000, line 2 should be 2500, and line 3 8500? Or do I need to do something on her 2019 8606 form?
                      you didnt carryover any basis from 2019 i believe.

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                      • #41
                        Peds Help! I created my first tIRA at Vanguard a few days ago (before I saw this thread). I only put an initial deposit of 1K into the money market. Did I already mess this up? Why do you recommend doing the entire 6K at once?

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                        • #42
                          Originally posted by braindoc View Post
                          Peds Help! I created my first tIRA at Vanguard a few days ago (before I saw this thread). I only put an initial deposit of 1K into the money market. Did I already mess this up? Why do you recommend doing the entire 6K at once?
                          cause its easier.
                          fund the next 5K at once, not in pieces. then convert 100%.

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                          • #43
                            Originally posted by Peds View Post

                            you didnt carryover any basis from 2019 i believe.
                            so I need to send in a new 8606 form for 2019, right? since the contribution ended up being $6k instead of $3.5k?

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                            • #44
                              Originally posted by JBME View Post

                              so I need to send in a new 8606 form for 2019, right? since the contribution ended up being $6k instead of $3.5k?
                              yes your 2019 8606 should show 6K, 2.5 done in calendar year, and 3.5 done during the 2020 yr.
                              only the 2.5 was converted for 2019 however.

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                              • #45
                                thanks, Peds!

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