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  • Backdoor Roth help

    Hello, I'm trying to do a backdoor roth this year but am becoming very wary of the pro-rata rule and it's implications.

    My accounts:

    Traditional IRA: 8000

    Roth IRA: 7000

    Non-deductible IRA: 12000

     

    Wife:

    Traditional IRA: 4000

    Roth IRA: 14000

     

    I have a solo 401k through vanguard, but they don't accept rollovers or else I would put the traditional IRA money in there to avoid pro-rata?

     

    Any suggestions?

  • #2
    Your situation isn't dire and you do have a couple of options.

    You could open up a Solo 401k somewhere else that does accept rollovers,  I know TD Ameritrade does for instance.  If your wife has an employer 401(k) she could also roll her Traditional IRA balance into it if the plan accepts outside rollovers.

    If neither of those are good options, your Traditional IRA balances aren't huge, so you may want to consider biting the bullet and converting both yours and your wife's balances to a Roth IRA.  You would pick up income on the $12,000, but with the tax cut, 2018 is as good of a year as any to do that.

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    • #3
      With just $12k I would just eat it and do a taxable conversion.  That's what I did in 2017.

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      • #4
        I would think you could switch from Vanguard to ETrade or Fidelity for the individual 401(k), which seem to be the most preferred for their flexibility and investment options.

        If you'll be in the 24% tax bracket this year (taxable income of up to $315K for couples) you could just do as @Craigy says and pay the $3,000 or so in tax between the two of you to have all of your IRA money in Roth accounts.

         

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        • #5
          Greetings. I did a Backdoor Roth in 2017 and am filling out the form 8606. However I can’t find one that is for 2017 ... the only one I’ve been able to find is labeled for 2016. Anyone able to find the 2017 form 8606?  A link would be great. Thanks!

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          • #6




            Greetings. I did a Backdoor Roth in 2017 and am filling out the form 8606. However I can’t find one that is for 2017 … the only one I’ve been able to find is labeled for 2016. Anyone able to find the 2017 form 8606?  A link would be great. Thanks!
            Click to expand...


            They are probably not out yet. We are still waiting on final forms through our tax software service, probably won't be able to start filing tax returns until end of Jan/1st of Feb.

            If you are trying to file your income tax return early for some reason, you can just file w/o the 8606 and send it in when it comes out. Or use a 2016 8606.
            Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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