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Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: Kjmiller1984 on December 16, 2015, 11:06:11 AM

Title: Backdoor Roth Question
Post by: Kjmiller1984 on December 16, 2015, 11:06:11 AM

So, we have maxed out my wifes IRA for 2015, I logged onto vanguard to open a roth IRA so that i could do the conversion, but it wont let me open one because i cant make anymore contributions to it for the 2015 calendar year. Does anyone know a way around this?

Title: Re: Backdoor Roth Question
Post by: dandarc on December 16, 2015, 11:08:18 AM

Call Vanguard.  I'd bet they'll have you set in under 15 minutes.

Title: Re: Backdoor Roth Question
Post by: BarkyardBQ on December 16, 2015, 11:11:24 AM

For same year contribution, isn't that technically just a recharacterization?

Also IRA to IRA isn't a backdoor Roth. Unless we're missing some details.

Title: Re: Backdoor Roth Question
Post by: dandarc on December 16, 2015, 01:19:21 PM

Quote from: BackyarBQ on December 16, 2015, 11:11:24 AM

For same year contribution, isn't that technically just a recharacterization?

Also IRA to IRA isn't a backdoor Roth. Unless we're missing some details.

A backdoor Roth involves a tIRA to Roth IRA conversion.  And even in the same year, you can do a conversion.  Indeed, a recharacterization wouldn't work here, because OP's income presumably disqualifies him or her from making regular Roth IRA contributions.

Backdoor Roth steps:

1.  Contribute to tIRA.  Don't take the deduction for doing so.
2.  Convert to Roth IRA.  Since you didn't deduct in step 1, you're only taxed on earnings.

There is also a Mega-Backdoor Roth that involves after-tax (not Roth) contributions to your 401K.