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Rollover IRA conversion into a Backdoor Roth IRA for Spouse

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  • Rollover IRA conversion into a Backdoor Roth IRA for Spouse

    My wife has ~$2400 in a rollover IRA with Fidelty from a previous employer and does not have the option to roll it into a 401k in new job.  I want to pay taxes on the $2400 this year and contribute to a spousal backdoor IRA with vanguard.  This will be my first year doing a backdoor IRA for my spouse(and myself since we finally hit the income limit). My plan is to open rollover IRA and Roth IRA in spouse's name at vanguard.  I will transfer the $2400 from Fidelty to vanguard and contribute additional $3100 from money market account.  Then do the conversion to Roth IRA.  When trying to fill out the IRS 8606, I can't seem to complete it so that line 18(taxable amount) is $2400 . How do I do this in the simplest/correct way and not be taxed double on any of the contribution?

  • #2
    I want to make sure you understand that your spouse is eligible to make the full $5,500 contribution to her non-deductible IRA - assuming you are not in the income phase-out range for IRA contributions, where you are eligible make a partial Roth contribution.

    You don't have to complete form 8606 until you file your 2017 tax return. So, if you use a tax preparer, they will complete the form for you. The important thing to know is that only the balance of your spouse's Rollover IRA will be taxable.

    By the way, be sure to do all of this by direct transfer, not rollover. That way you can avoid running afoul of the IRS rule limiting you to one rollover in a 12-month period.