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can you do backdoor IRA with 401k and rollover ira?

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  • can you do backdoor IRA with 401k and rollover ira?

    I make about 500k/year.

    I have 28k in rollover ira from residency/fellowship.

    I have 45k in my company's 401k (s-corp, sole owner).

    Can i do roth ira for 2017? I think I read somewhere that I would have to roll over the rollover to my company 401k since I can't have a roth ira and a rollover ira.

  • #2
    Correct. You cannot have any IRAs as that will impede your ability to backdoor.

    1. Rollover your residency IRA into your new 401k.
    2. Contribute 5500 to traditional IRA.
    3. Covert tIRA to Roth.
    4. Profit.


    • #3
      If you do not want to pay taxes prorated on the roth ira then you should roll the 28k into your company's 401k if allowed.  You have until tax day in April, 2018 to fund your 2017 Roth.  So, you could put in your 2017 and 2018 roth contributions early in 2018 and then roll them together.  Depending on possible new tax legislation, you could decide that rolling the 28K into the Roth and paying taxes was worth it to you.  Good luck!


      • #4
        There are 2 steps to the backdoor Roth:

        • Step 1 - contributing to a nondeductible IRA, and

        • Step 2 - converting that n.d. IRA to a Roth.

        Your balance in a pre-tax TIRA is irrelevant for Step 1. To complete Step 2 without invoking the pro-rata rule (which will tax part/all of the conversion), you must have zero balance in a pre-tax IRA on 12/31 of the calendar year in which you convert. 12/31 is the only day of the year that matters. Or, like Dr. Mom recommended, you can just wait until the new year to do it all in the same year.

        See Explaining Backdoor Roth IRAs for a more exhaustive analysis.
        Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087