Author Topic: Backdoor Roth w/Fidelity & Taxes Questions  (Read 1467 times)

frozen

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Backdoor Roth w/Fidelity & Taxes Questions
« on: March 28, 2017, 05:46:01 PM »
My income is too high to contribute to a Roth, so I'd like to do a backdoor Roth with Fidelity, where I have my existing Roth and old rollover IRA money.
Questions:
If I do a backdoor Roth for 2016 by April 15 this year, but I have already done my 2016 taxes, do I have to amend my return to pay the tax? Can someone explain how the taxes work when doing this?

Since I already have retirement accounts with Fidelity, can I use them for this process? Or do I need to open a new IRA and new Roth account with Fidelity?

shawndoggy

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Re: Backdoor Roth w/Fidelity & Taxes Questions
« Reply #1 on: March 28, 2017, 06:11:08 PM »
If you have "rollover money" (i.e. you rolled something over into a traditional IRA) the backdoor roth won't really work for you.  You need to roll that back into a 401k.  Backdoor roth really only works when you don't have a tIRA at all, so that the entire balance can be recharacterized.

frozen

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Re: Backdoor Roth w/Fidelity & Taxes Questions
« Reply #2 on: March 28, 2017, 09:24:56 PM »
If you have "rollover money" (i.e. you rolled something over into a traditional IRA) the backdoor roth won't really work for you.  You need to roll that back into a 401k.  Backdoor roth really only works when you don't have a tIRA at all, so that the entire balance can be recharacterized.

Ok, so for my purposes, can't I just open another tIRA with Fidelity and convert that into my existing Roth IRA?

shawndoggy

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Re: Backdoor Roth w/Fidelity & Taxes Questions
« Reply #3 on: March 28, 2017, 09:40:56 PM »
no.  all of your tIRAs are one big tIRA for IRS purposes.

frozen

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Re: Backdoor Roth w/Fidelity & Taxes Questions
« Reply #4 on: March 29, 2017, 10:38:20 AM »
Thanks everyone for the feedback.
I am going to table the backdoor Roth for now.

I am thinking about funding my 2016 tIRA Fidelity to the max for now and I will revisit this topic for 2017 in the fall.