Hello to all tax-geniuses out there!
I have a peculiar question and I'm not even sure how to search for the correct terms to see if it's been answered, so my apologies if it has been... and feel free to point me to the relevant posts if this has been done to death.
Question:
I currently contribute to a Roth IRA, and happily for my personal life and unhappily for my Roth IRA account, I'm getting married in a month. Our combined income will knock us both out of the allowable Roth IRA contributing bracket.
Since I have a 401K at work, I will also not be eligible for a pre-tax traditional IRA, but I understand that I can contribute post-tax money to a traditional IRA and then use the backdoor Roth conversion to move it back to the Roth IRA. Correct?
My question is, how are taxes handled on the conversion if you have already paid taxes on the traditional IRA and you then convert it to a Roth? Do you need to pay taxes on the money twice (ie before it goes into the traditional and then when it is moved to the Roth) or if you move it within a certain period of time will it only be taxed once?
I'm hoping one of the brilliant minds out there either knows or has already answered this question. I will of course verify with a CPA prior to doing anything permanent, I just wanted to get an idea of what the situation is first.
I suppose the answer to this question will determine whether I move it at all right now or hold it until I'm in a lower tax bracket in the future.
Thank you all very much for your help!
Tracy