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  • Rollover 401

    So I graduated from residency about 3 years ago now. While in residency I believe I had a 403 (b) which I rolled over to a 401 k after residency completed. Since residency I have been putting 6 k per year into this also in addition to my current 403 b and 457. The more I have looked and began to get more familiar with finances I'm not sure I'm doing this right? Should I have converted the 403b to a roth at the end of residency? What should I do going forward?

  • #2
    What 401k did you roll this into exactly? Do you have more than one job?

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    • #3
      what's done is done. What is your current marginal tax rate

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      • #4
        Whoops I said rolled over into 401k but meant rolled it over into an IRA.

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        • #5
          So you rolled your residency 403b into a TIRA (Traditional IRA) and you've been making $6k contributions to a TIRA since you graduated residency 3 yrs ago (either the one you rolled your 403b into or another). Is that correct?

          If so, depending upon your earnings, you probably should have been filing a Form 8606 with your Form 1040 for at least the last 2 years. If you have been converting your annual TIRA contributions to a Roth IRA (the Backdoor Roth maneuver), you should have been filing a Form 8606 and paying pro-rata taxes.

          Have you been filing the Form 8606? If so, have you been paying pro-rata taxes? This is fixable if you haven't, so please don't stress. We just need more information to give correct advice.

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

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          • #6
            So I'm almost certain it was a 403b in residency but I'm not sure how to check now to be 100% sure. Yes I have been making 6 K contributions to the IRA since residency. It simply says Rollover IRA on my Fidelity account but I assume this is a traditional IRA. I have never done a 8606 form before but have also not been doing any backdoor Roth conversions either. I'm not sure that I quite even understand how to do a backdoor Roth. I was under the assumption that if I had this rollover (traditional) IRA that I could not do a backdoor Roth?

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            • #7
              Originally posted by EMSpartan View Post
              So I'm almost certain it was a 403b in residency but I'm not sure how to check now to be 100% sure. Yes I have been making 6 K contributions to the IRA since residency. It simply says Rollover IRA on my Fidelity account but I assume this is a traditional IRA. I have never done a 8606 form before but have also not been doing any backdoor Roth conversions either. I'm not sure that I quite even understand how to do a backdoor Roth. I was under the assumption that if I had this rollover (traditional) IRA that I could not do a backdoor Roth?
              Yes you can: https://www.whitecoatinvestor.com/ba...-ira-tutorial/

              You can only roll over $6/year’s worth into the Roth without having to pay extra taxes. So assuming you put in $6/yr for 3 years, you can move $18k right now to a Roth IRA tax free.

              You then need to move everything that is left in the TIRA to your employer 401k before the end of this year. You cannot have any money left over in your TIRA after your backdoor Roth.

              You need to do a 8606’s to account for every year’s worth of backdoor Roth you are converting. So if it’s 3 years/$18k, you fill it out three times. The 8606’s are year specific so make sure you download the right form for the right year. Then submit to the IRS before the end of 2021 (we just mailed it in).

              A pain in the butt, but worth it.

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