2023 Backdoor Roth IRA Home Base

[Peds]

My husband and I are looking to do our first Backdoor Roths for 2020 & 2021. My question is this- I have a $160k Traditional IRA in premarital assets I was advised not to co-mingle with marital assets, or it wouldn’t be protected in the unlikely event of a divorce. We have the extra cash to pay taxes on the conversion to make way for us to do Backdoors, but then I will have co-mingled assets. Any suggestions?

no clue on the legal aspects but i suspect if you use joint money to pay the tax on the conversion its no longer just yours.
the larger question is what is the marginal rate you are converting at?
can you move to an employer plan? do you have a plan to do nondeductible contributions and convert at a lower rate?

[Peds]

Hello, I'm new to the WCI universe. I have a question involving the pro rata rule for Roth conversions and governmental 457b plans. I recently discovered that my employer's 457b plan accepts rollovers. I then performed a direct rollover of my rollover traditional IRA held at Vanguard to the 457b plan (about $170k). I thought that by doing this the 457b would shield me from having to be subjected to the tax implications of the pro rata rule when I report my 2021 backdoor Roth conversion in next year's tax filing. However, the money from the direct rollover to the 457b is now listed as a separate line item labeled "IRA rollover" within my 457b plan account. I found the IRS rollover chart after the fact and it states that traditional IRA to 457b rollovers are allowed but there is a footnote saying the rollover money must be held in a separate account from the payroll contributions. Was my initial logic correct in thinking that the 457b will shield me from being subjected to the pro rata rule? Or was I wrong? Will I have to include the money rolled over to the 457b plan on IRS form 8606? I haven't performed the Roth conversion yet because i'm not sure what to do. Thanks to anyone that can offer any help.

so retirement plans will sometimes hold money in different pots for you to see which is rolled over vs contributed vs etc. but this is for record keeping purposes. its all 1 pot in the end.
its now in a 457, therefore its not an IRA, therefore no prorata issue.

[rgoldbe1]

Hi,
Appreciate any help.

In 2020, I filed my taxes and then subsequently made my first traditional IRA contribution of 6k (for 2019) and 6k (for 2020). I lump converted afterwards to a Roth IRA.

For my current taxes, do I put that my IRA contribution was 12k or do I have to amend my 2019 taxes for the first 6k eventhough I have no forms that show a 2019 contribution? My 1099-R has $12,000.00 on it, but not sure if that would seem like an illegal contribution.

Thank you,
Randy

[Peds]

Hi,
Appreciate any help.

In 2020, I filed my taxes and then subsequently made my first traditional IRA contribution of 6k (for 2019) and 6k (for 2020). I lump converted afterwards to a Roth IRA.

For my current taxes, do I put that my IRA contribution was 12k or do I have to amend my 2019 taxes for the first 6k eventhough I have no forms that show a 2019 contribution? My 1099-R has $12,000.00 on it, but not sure if that would seem like an illegal contribution.

Thank you,
Randy

in 2020 you were supposed to file form 8606 for 2019.
for 2020 you will have 6K of contributions, 12K of conversions with 6K of basis.

read the articles and come back with questions.

[jfoxcpacfp]

Hi,
Appreciate any help.

In 2020, I filed my taxes and then subsequently made my first traditional IRA contribution of 6k (for 2019) and 6k (for 2020). I lump converted afterwards to a Roth IRA.

For my current taxes, do I put that my IRA contribution was 12k or do I have to amend my 2019 taxes for the first 6k eventhough I have no forms that show a 2019 contribution? My 1099-R has $12,000.00 on it, but not sure if that would seem like an illegal contribution.

Thank you,
Randy

The IRS allows taxpayers to file Form 8606 retrospectively for any past year it was omitted w/o amending income tax returns if there was no tax impact.

• 2019: file form 8606 to show your $6k TIRA contribution
• For 2020 form 8606:
  • 2020 TIRA contribution of $6k
  • Conversion = the amount converted for 2019 and 2020
    • any growth w/b taxable.

Welcome to the forum!

[Jtkata8]

I can't seem to find this answer by Google search or in any bdrRoth posts. If I file MFS for 2021, can my spouse and I both still complete a bdrRoth? We would both be over the $10k earned income limit to contribute directly to rIRA accounts. Thanks!

[jfoxcpacfp]

Yes, you will need to do BD Roth IRA; this is pretty common. The contribution is phased out for the first $10k MAGI (not earned income limit), which applies to almost nobody, anyway.

Welcome to the forum!

[ryanbach1028]

Can I do a backdoor Roth IRA even if I am doing a mega backdoor Roth via after tax 401k contribution i.e can I do both in the same year ?

[GasFIRE]

Can I do a backdoor Roth IRA even if I am doing a mega backdoor Roth via after tax 401k contribution i.e can I do both in the same year ?

Yes. IRA and 401k are separate entities.

[aundie]

Hello

Seeking guidance here. If I wanted to roll over an old company's regular 401k plan (either the full amount 250k or a portion of it), I would have to roll it into a regular IRA first and then roll all of it into a Roth IRA, right?

[Hank]

Hello

Seeking guidance here. If I wanted to roll over an old company's regular 401k plan (either the full amount 250k or a portion of it), I would have to roll it into a regular IRA first and then roll all of it into a Roth IRA, right?

You certainly don’t have to roll an old 401(k) into a traditional IRA and then convert it to a Roth IRA.

Do you have sufficient funds in a taxable account to pay the taxes on a quarter million dollar Roth conversion? Do you really want to pay income taxes on another $250K of income at your highest marginal federal and state tax rate?

More likely you want to see if your current employer will accept a roll in of funds from a traditional IRA or directly from a previous employer’s 401(k).

[jfoxcpacfp]

Hello

Seeking guidance here. If I wanted to roll over an old company's regular 401k plan (either the full amount 250k or a portion of it), I would have to roll it into a regular IRA first and then roll all of it into a Roth IRA, right?

No, the IRS has allowed direct Roth rollovers from 401k’s for several years now.

Welcome to the forum!

[T.W.]

Hello to everybody, I'm very new to this forum.

I have a simple question about funding the backdoor rIRA account.
Currently I have a Rollover IRA account, that I just converted all my after-tax dollars into the my rIRA; Can I use the same Rollover IRA account to deposit the $7K non-deductible funds to contribute to my rIRA or should I make things more clear to the IRS and just open a new Traditional IRA account to do my first backdoor rIRA contribution?

Thank you in advances for your help and answer and thank you for sharing all the wonderful wisdom and knowledge with everyone to read and learn.

T.

[jacoavlu]

Hello to everybody, I'm very new to this forum.

I have a simple question about funding the backdoor rIRA account.
Currently I have a Rollover IRA account, that I just converted all my after-tax dollars into the my rIRA; Can I use the same Rollover IRA account to deposit the $7K non-deductible funds to contribute to my rIRA or should I make things more clear to the IRS and just open a new Traditional IRA account to do my first backdoor rIRA contribution?

Thank you in advances for your help and answer and thank you for sharing all the wonderful wisdom and knowledge with everyone to read and learn.

T.

i’m sorry i can’t follow with certainty. this is your first backdoor roth but you have a rollover IRA account that had after tax funds? please clarify with some more detail

[T.W.]

i’m sorry i can’t follow with certainty. this is your first backdoor roth but you have a rollover IRA account that had after tax funds? please clarify with some more detail

Sorry about about that. I have an old Rollover IRA account which is at zero dollars. Can I use this Old Rollover IRA account to do my non-deductible contribution?
Or is it better to open a Traditional IRA account to do the non-deductible contribution?

Thank you again