The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: firemane on January 08, 2019, 04:59:34 PM
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Hello all.
I am pondering if this would work: Take one year off work to travel, and have a very low income during that year due to the only income being stock dividends and bank acct yield.
During that year, take a large amount of money from a tira and convert it to a Roth IRA. Is this something that would work, or is the withdrawal from the tira itself considered part of your agi?
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So if I understand correctly. For someone in he 22% bracket: converting to Roth Anything under 39475 will be a great opportunity for the Backdoor, however anything beyond that will just be the usual tax rate or even more depending how much the conversion is?
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So if I understand correctly. For someone in he 22% bracket: converting to Roth Anything under 39475 will be a great opportunity for the Backdoor, however anything beyond that will just be the usual tax rate or even more depending how much the conversion is?
Yes. Remember that $39475 figure is taxable income, so you could add the $12K personal exemption (assuming a filing status of single) to that. So you could Roth convert $51,475 and that last $1 would be taxed at 12%, assuming zero other income, deductions and credits.
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Thanks guys, seems like a good opportunity to take advantage of when traveling
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I took almost 2 years off work in my mid 20s, regret not understanding this shit back then. I could have moved a good chunk of money from my first 401(k) into a Roth at low or no taxes.
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Why would you refer to this as “backdoor.” What OP talks about is just a Roth conversion.
The so called “backdoor” Roth is a Roth conversion following a nondeductible tIRA contribution, by someone who has income over the limit for a direct Roth contribution or a deductible tIRA contribution. Such persons generally have zero balances in pretax IRA assets. Otherwise the backdoor conversion would be subject to pro rata taxation