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Is this Backdoor + Mega plan correct?

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  • Is this Backdoor + Mega plan correct?

    Current Situation:

    Spouse: traditional IRA: $2,000 pre-tax

    Me: traditional IRA: $0

    Spouse: Employer 403b

    Me: Employer 401k allowing non-Roth after-tax with in-service non-hardship withdrawals.

     

    Goal: Perform backdoor Roth IRA AND Mega-backdoor this year.

     

    So my plan is:

    1) trustee-to-trustee transfer spouse tIRA money to her employer 403b (bring balance to $0).

    2) then we will contribute $5500 per person to our traditional IRA accounts, and then instruct the plan administrator to convert these to Roth IRA a few days later.

    3) i will then instruct 401k admin to trustee-to-trustee transfer non-roth after-tax contribution to Roth IRAs and the earning to my empty traditional IRA.

    4) Before December 31, 2017, will trustee-to-trustee tranfer tIRA amount (originally earnings from NRAT contributinos) back into the employer 401k pre-tax account.

     

    Does this successfully address both Pro-rata and One-per-year IRS rules?

     

     

  • #2
    That sounds like a plan. Suggestions I would make:

    1. Go ahead and convert the $2k pre-tax TIRA into a Roth and pay the taxes.

    2. Same for any annual earnings on the NRAT. Move it all to a Roth and start the tax-free growth. Done annually, the tax should be relatively minimal. Of course, this assumes there is growth in the account.


     
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