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Yet Another Backdoor Roth IRA Post

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  • Spatty99
    replied
    Yes, that looks like the correct form. Just fill it out and send or bring it in.

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  • manuelmas
    replied




    Make sure you get the conversion paperwork, NOT the recharacterization paperwork. My Scottrade office screwed up my request by doing a recharacterization. So I had to undo/re- recharacterize back to a traditional and then convert, a major hassle, especially at tax time. The paperwork itself is really simple, especially if you don’t have comingled funds.
    Click to expand...


    I cant do the process online in Scottrade?

     

    Is this it: https://www.scottrade.com/documents/formscenter/Bysis_SF2350_DirConverReq.pdf

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  • Spatty99
    replied
    Make sure you get the conversion paperwork, NOT the recharacterization paperwork. My Scottrade office screwed up my request by doing a recharacterization. So I had to undo/re- recharacterize back to a traditional and then convert, a major hassle, especially at tax time. The paperwork itself is really simple, especially if you don't have comingled funds.

    Leave a comment:


  • manuelmas
    replied







    So, then I could just leave it there and not invest in either MMA or MMF and do Backdoor Roth anyway?
    Click to expand…


    Yes, you don’t need to invest it in anything if you’re planning on doing a backdoor roth conversion after a few days.  It’s a cash transfer.  You’re not going to invest in a fund and then transfer shares to a roth. You’re transferring cash to a traditional, then cash to a roth. As soon as the account says “available for withdraw” you can go ahead and convert it to a roth.
    With Vanguard it usually takes 7 business days from the day you transfer money to the traditional to be able to convert it to a roth. I just leave it sit there as cash the whole time.
    Click to expand...


    Thank you. Right now, there is nothing available in cash available to withdraw. I will be waiting on that. Afterwards, I will see how to transfer it to my Roth IRA (both with Scottrade). I don't see any option for that. Scottrade isn't very user friendly, I think.

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  • hightower
    replied




    So, then I could just leave it there and not invest in either MMA or MMF and do Backdoor Roth anyway?
    Click to expand...


    Yes, you don't need to invest it in anything if you're planning on doing a backdoor roth conversion after a few days.  It's a cash transfer.  You're not going to invest in a fund and then transfer shares to a roth. You're transferring cash to a traditional, then cash to a roth. As soon as the account says "available for withdraw" you can go ahead and convert it to a roth.
    With Vanguard it usually takes 7 business days from the day you transfer money to the traditional to be able to convert it to a roth. I just leave it sit there as cash the whole time.

    Leave a comment:


  • Spatty99
    replied
    That is what i did (instead of messing with transactions before and after to buy/sell).

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  • manuelmas
    replied
    So, then I could just leave it there and not invest in either MMA or MMF and do Backdoor Roth anyway?

    Leave a comment:


  • jfoxcpacfp
    replied




    From what I understand, the point of investing in a money market fund is to limit growth (and thus tax) prior to conversion. Unless I’m missing something (insert expert feedback here), I don’t think there would be much issue to leave the money in cash or just invest as you wish.
    Click to expand...


    Yes, that is exactly right. You would build the portfolio after the Roth conversion takes place a few days later.

    To reiterate, I prefer MMA to MMF because the MMF can actually lose value. Unlikely, but it has happened.

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  • Spatty99
    replied
    From what I understand, the point of investing in a money market fund is to limit growth (and thus tax) prior to conversion. Unless I'm missing something (insert expert feedback here), I don't think there would be much issue to leave the money in cash or just invest as you wish.

    Leave a comment:


  • jfoxcpacfp
    replied
    The Prime Money Market Fund would be synonymous with any MMA (Money Market Account) that your specific custodian offers. I recommend a MMA rather than an MMF.

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  • manuelmas
    started a topic Yet Another Backdoor Roth IRA Post

    Yet Another Backdoor Roth IRA Post

    Hello:

    I finally took my first step in doing the Backdoor Roth IRA recommended by WCI and others. I have my Roth IRA with Scottrade. Opened a traditional IRA with Scottrade and contributed 5,500. I am trying to find the Prime Money Market Fund as recommended by WCI but cannot find it. Any recommendations if this is not available in Scottrade?
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