Backdoor Roth IRA

[dfwilson71]

I have a traditional IRA with around 20K in it, but want to take advantage of the backdoor Roth IRA, but also don't want to get hit with the pro rata rule. Any advice as to what I can do?

[MaxPower]

Google is your friend:
https://www.whitecoatinvestor.com/ba...-tutorial/#tax

See the bottom of the article for the 3 possible things you can do with your traditional IRA (step 5 in the instructions on how to perform the backdoor Roth).

[jfoxcpacfp]

Check your current retirement plan’s SPD (or with your HR) to see if it accepts rollovers. If so, roll the $20k over to your current plan. Otherwise, consider a Roth conversion.

And the pro-rata tax is not that big a deal - you’re just prepaying tax on your pre-tax account today instead of in the future and getting $$ into a Roth to start tax-free growth sooner. You are not paying “extra” taxes.

[Turf Doc]

Check your current retirement plan’s SPD (or with your HR) to see if it accepts rollovers. If so, roll the $20k over to your current plan. Otherwise, consider a Roth conversion.

And the pro-rata tax is not that big a deal - you’re just prepaying tax on your pre-tax account today instead of in the future and getting $$ into a Roth to start tax-free growth sooner. You are not paying “extra” taxes.

well the pro-rata is basically just making you do a partial forced Roth conversion right? So if you didn’t want to do a roth conversion right now then you’re losing on the delta between your tax rate now and when you would otherwise take it out.

I wonder how difficult it is to figure out a way to open a solo 401k and roll it over just to avoid the pro rata…

[GasFIRE]

I wonder how difficult it is to figure out a way to open a solo 401k and roll it over just to avoid the pro rata…

Get a side gig that pays via 1099. Well discussed in many threads on this forum.

[FIREshrink]

If the backdoor Roth is going to stick around for a few decades it's not a big deal to pay taxes on a $20k conversion now. But that is a big if.