Author Topic: Mega Backdoor Roth - Fidelity Rollover IRA or Trad IRA account?  (Read 619 times)

lefty

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Trying to do a Mega Backdoor in service rollover to a Fidelity Roth IRA for contributions.
For gains going to fidelity, does anyone know which account should I be depositing my check (gains only) into for Fidelity (Rollover IRA and Trad IRA) ?

I think they are the same thing but I am not certain.

Thanks

MDM

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Re: Mega Backdoor Roth - Fidelity Rollover IRA or Trad IRA account?
« Reply #1 on: March 29, 2024, 11:12:38 PM »
Are you asking about the Backdoor Roth or the Mega-backdoor Roth?

lefty

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Re: Mega Backdoor Roth - Fidelity Rollover IRA or Trad IRA account?
« Reply #2 on: March 30, 2024, 10:46:33 AM »
Are you asking about the Backdoor Roth or the Mega-backdoor Roth?

Apologies. I should rephrase my question.
Does anyone know what the difference is between Fidelity's Rollover IRA and Traditional IRA ?
It sounds like 2 different names for the same product. Can't be right?

Additional info: I'm trying to do a Mega Backdoor Roth and not sure if I should open a Rollover IRA or Traditional IRA (with Fidelity) to deposit the check for any gains.

I did try to call Fidelity to get this info and they asked me what I wanted to do. When I explained to them, they told me that they can't help me because they do not give tax advice.







terran

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Re: Mega Backdoor Roth - Fidelity Rollover IRA or Trad IRA account?
« Reply #3 on: March 30, 2024, 11:48:48 AM »
They're basically the same. I think there might be some instances where an IRA that only contains money rolled over from a workplace retirement plan might have better protection from lawsuits.

MDM

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Re: Mega Backdoor Roth - Fidelity Rollover IRA or Trad IRA account?
« Reply #4 on: March 30, 2024, 01:28:13 PM »
Additional info: I'm trying to do a Mega Backdoor Roth and not sure if I should open a Rollover IRA or Traditional IRA (with Fidelity) to deposit the check for any gains.
Money contributed to and withdrawn from those is treated identically by the IRS.

At one time, only money that had been "rolled over" from an employer plan to an IRA, and associated gains, could then be rolled back into an employer plan.  The IRS will now allow money from any traditional IRA to be rolled into an employer plan, but some of those employer plans retain the "only from a Rollover (aka Conduit) IRA" restriction.

So it probably doesn't matter, but given the choice a Rollover IRA provides a theoretical advantage.  Often the taxable portion of an MBR distribution is small enough that you might as well put it all into Roth and pay tax on the taxable portion.

If the taxable portion is sizeable, and your employer plan allows, you could distribute into the Roth and Rollover/Traditional IRAs as applicable, then roll the taxable portion back into the employer plan.  This avoids the immediate tax on that amount, and avoids pro-rata issues on that amount should you wish to use the "non-mega'" backdoor Roth.