I don't do a Roth because my income is currently the highest it is likely to ever be and also because I have a few older rollover IRAs. If I opened a Roth, all of the money in tIRAs would be subject to taxes as if I rolled it all over. My only way out of that I can think of is to wait until I'm close to FI and ready to retire, then I can take all the money in my tIRAs and roll it into my 401k.
I think you may be confused about how to set yourself up for a backdoor Roth IRA. If you move all of your old pre-tax rollover IRAs into your 401(k) now, you would then be able to open a new traditional IRA, make non-deductible contributions to it, and roll the balance to a Roth IRA. None of this would increase your tax bill one bit.
I am not seeing the difference. Unless it is to do this now, in which case, I believe my tax rate is higher now than it will ever again Be. Am I missing an obvious point?
Yes, the point is to do this now. Your current tax rate is irrelevant. Everything I described above is a non-taxable event.
Ahhh. It's finally sinking in. Roll all existing tax-deferred IRA into 401k and leave it there (until much later). then start a Roth (taxable income to tIRA to backdoor Roth) with money I would be putting into a taxable account anyway. Thank you for your patience in getting me to see that.
Sounds like a good plan and I'll check my 401k to see when it makes sense to start that.
Related question: in my existing tIRA, there is at least $4000 (possibly $8000) AFTER-TAX money because the year(s) I contributed separately to IRA, I earned too much to deduct it. Can or should I roll that back into my 401K as well?
Plan is now to:
1. Consider moving existing 401k to Vanguard to reduce fees (especially for closing/moving accounts. I only want to pay this once more in my lifetime)
2. Roll all tIRA funds into 401k. Maintain my desired allocations.
3. Each year, contribute $5500 to new (empty) IRA, then backdoor Roth it.
4. Next fall, consider new Health plan with an HSA
I like this. I feel as if I have some control again. It may take me 9 months before all of this gets done, but in terms of real time, it's probably just a few phone calls.