I have been using the backdoor IRA method for several years. I also have a 401k and profit sharing plan through my private group. This year, without considering the consequences, i took some money out(100k) of the 401k and rolled it over into a self directed IRA in order to do some alternative investments. I had already made the "back door" contributions for this year for myself and wife, and now realize i will be basically double taxed on that 5500 under my name. My question for the forum is this: Considering that I do not want to convert this 100k from regular to ROTH because I don't want to pay the taxes on it, is it still worth doing "back door IRA", paying the additional tax in order to increase the money in the roth account available for investing.
My (probably flawed) thinking is that if i did a straight roth conversion, I would be paying taxes on that money anyway, so instead, by paying the taxes on the 5500 again, I increase the amount in the Roth IRA without decreasing the amount in the traditional IRA. Is this foolish because I am in a higher tax bracket now and I would be better off investing this money in a regular account rather than being double taxed? or is the tax free growth i could get for the next 30 years worth the double tax now? I am 40 years old
My (probably flawed) thinking is that if i did a straight roth conversion, I would be paying taxes on that money anyway, so instead, by paying the taxes on the 5500 again, I increase the amount in the Roth IRA without decreasing the amount in the traditional IRA. Is this foolish because I am in a higher tax bracket now and I would be better off investing this money in a regular account rather than being double taxed? or is the tax free growth i could get for the next 30 years worth the double tax now? I am 40 years old
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