Traditional IRA or Backdoor IRA

[littlej2455]

I am new to investing as I just left my financial advisor. I had a 403b with my previous employer and it was recommended by my advisor to rollover my 403b into a traditional IRA. I am currently in the 22% tax bracket and will probably reach the 35% tax bracket at my prime. I should be a small business owner in 2 short years, with the possibility of starting an individual 401k. What is your thoughts on keeping my traditional IRA or moving those funds to another account to allow the future possibility of a backdoor IRA? Would you recommend convert the traditional IRA into my roth IRA while I am in a lower tax bracket or pushing that over into a 401k?

Thank you so much for your help!

[MDM]

littlej2455, welcome to the forum.

What fees and expense ratios are you paying in the 403b?  Need that to know how good the financial advisor's advice was.

The choice of Traditional versus Roth depends on the 22% now vs. what you expect to pay when you withdraw from traditional - the 35% you expect to pay on future earnings while employed isn't directly relevant.  It could be indirectly relevant, in that if you expect your retirement marginal rate to be 22% or more, converting to Roth now (especially if you can pay the tax from cash on hand) is probably good.

[littlej2455]

What fees and expense ratios are you paying in the 403b?  Need that to know how good the financial advisor's advice was.

Thank you for your help! I am unsure of the fees because our advisor transferred to a traditional IRA about 3 years ago.

That is interesting to think about how much I would be pulling out each year when I retire to put in different tax brackets. So you would recommend just paying the tax bill this year, and contribute to a backdoor IRA once I am no longer able to contribute to my Roth?

Thank you again!

[MDM]

So you would recommend just paying the tax bill this year, and contribute to a backdoor IRA once I am no longer able to contribute to my Roth?

"Recommend" may be too strong as I don't know details about your situation, but "that seems reasonable, based on what you have shared" does fit. In any case, good luck!

[littlej2455]

Thank you so much for your help! I am loving reading this forum and blog. Have a great day!