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IRA debacle

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  • IRA debacle

    My wife has multiple IRAs which I have listed below.  I am trying to figure out how to consolidate these so she can do a back door roth every year in addition to a solo 401k.  Does anybody have any suggestions?


    USAA rollover IRA - $26,643

    Northwestern SEP IRA - $13,968

    Northwestern Mutual Roth - $3,254

    Roth IRA #2 - $8,913




  • #2
    Hardly a "debacle".

    Lose the Northwestern Mutual accounts. Transfer the Roth IRA to Vanguard or Fidelity and/or consolidating the NWM Roth with the other Roth (unnamed location).

    Roll the USAA rollover IRA and SEP IRA into Fidelity solo 401k (assuming she qualifies).


    • #3
      I thought you could only roll over 1 IRA per 365 days?



      • #4
        Check with a professional (or Fidelity/Vanguard customer service) but you might be able to transfer SEP IRA into rollover IRA and then roll into solo 401k. At worst, you could do one transaction now and the second one on 1/1/18.


        • #5
          The Roths don't get in the way of it.  If you want to do backdoor Roth, then you've just got to clear out your pretax.  The strategy that Vagabond laid out above is fine if you open an individual 401(k) which accepts incoming rollovers.

          The rule is one pretax IRA to another pretax if you move the SEP to the Rollover, that's your one per 12 months...but the 401(k) is not an IRA and thus doesn't apply anyway.  See IRS Pub 590a, Table 1-4.



          • #6
            Since your wife has a solo-k, it's easy. She just rolls all of the IRAs into it and she is fine with the backdoor.

            The one-per-year IRA rule is to roll out (to you personally) and roll back in within 60 days. Many people were taking multiple short-term loans from their IRAs and abusing the purpose of the 60-day rule. You can do as many trustee-to-trustee rollovers as you want at any time.

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


            • #7

              I thought you could only roll over 1 IRA per 365 days?
              Click to expand...

              The one rollover per 12 month period limitation is only for IRA -> IRA indirect rollovers. This is where the assets are directly transferred electronically or by check made payable to you personally, redeemed and the resulting funds sent by you. Never do this with an IRA -> IRA transfer.

              Rollovers between other types of plan to an IRA are not limited, i.e. between 401k and traditional IRA. Also, Roth conversions are not limited.

              You can do as many direct trustee -> trustee IRA - > IRA transfers as you want. This is where the rollover is done directly by electronic means (rare) or by check from the current custodian payable to the new custodian. This check is routinely mailed to you for forwarding to the new custodian. This is not a problem because the assets are never technically in your possession.

              Contrary to a previous recommendation, there is generally no reason to consolidate the SEP IRA into the traditional IRA, before rolling over the assets to a one-participant 401k. I recommend the following steps:

              1. Adopt a one-participant 401k at a provider that accepts incoming rollovers from IRAs.

              2. Rollover SEP IRA -> one-participant 401k plan by direct trustee -> trustee transfer.

              3. Rollover SEP IRA -> one-participant 401k plan by direct trustee -> trustee transfer.

              4. Consolidate the two Roth IRAs either by one direct trustee -> trustee transfer from one to the other or by two direct trustee -> trustee transfers from the two current accounts to a new Roth IRA provider.

              Note: Vanuard's Individual 401k does not allow incoming rollovers. Fidelity's Self-Employed 401k and one-participant 401k from some other providers do.