Author Topic: backdoor question  (Read 587 times)

thisisjeopardy

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backdoor question
« on: October 22, 2020, 07:29:06 AM »
I now currently have 6 figures in my tIRA. I make too much to put into a ROTH.

As much as I try I can't find a strategy on how to backdoor all of this. Do I just convert a little every year, as much tax hit as I can manage? Or can I put in the IRA max every year and convert that and not get dinged?

thisisjeopardy

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Re: backdoor question
« Reply #1 on: October 22, 2020, 07:47:43 AM »
After days of searching I think I found my answer lol.

https://www.whitecoatinvestor.com/17-ways-to-screw-up-a-backdoor-roth-ira/

Apparently I can roll this into my employers 401k! Never thought I'd be doing that. It does have low cost index funds (Vanguard) in there.

So I guess I can rollover there, make the balance 0 and then contribute the max during the calendar year and continue on the path. If someone believes the above is incorrect, please advise :)

terran

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Re: backdoor question
« Reply #2 on: October 22, 2020, 10:13:04 PM »
For future reference, this part of the forum is usually used for "meta" discussions about the forum. You would have gotten better/faster responses in the general discussion, ask a mustachian, or tax parts of the forum.

White Coat Investor is a great source for backdoor Roth information. He has a post walking you through every step (it may be linked to from the post you found).

It would be unwise to make non-deductible contributions to a traditional IRA with a large previously deducted balance because any Roth conversions will be mostly taxable, which isn't ideal at your current high rates. If you 401(k) accepts rollovers from IRAs and the investment options are acceptable to you then rolling the IRA into the 401(k) to allow backdoor Roth contributions with minimal taxes on the conversion is a great option.

If you IRA is a rollover IRA (from a 401(k), not from direct contributions) make sure your 401(k) provider knows that if they tell you they don't accept IRA rollovers as some plans will accept a rollover IRA even if they won't accept a contributory IRA.

secondcor521

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Re: backdoor question
« Reply #3 on: October 25, 2020, 09:55:25 AM »
terran has given you excellent information.

I'm just posting to say that I did exactly the maneuver you described and it worked perfectly.  The one thing I did because I'm a little paranoid about tax mistakes is to wait until I had confirmed that my IRA->401(k) rollover was complete and accepted and done before I started the backdoor process.