Author Topic: Help w/ Backdoor Roth  (Read 513 times)

RJC

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Help w/ Backdoor Roth
« on: December 27, 2018, 10:04:10 AM »
Hi folks,

This is my first attempt at a Backdoor Roth and I'm running into issues. I have a Rollover IRA at Fidelity of about ~13k and a Roth IRA. Do I need to roll that 13k into another 401k or are the taxes on converting the 13k minimal? Also, can I just open a new Traditional IRA or do I have to use my Rollover IRA?

I'm hoping to get this all done so I can report it for 2018.

Thanks in advance!

PDXTabs

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Re: Help w/ Backdoor Roth
« Reply #1 on: December 27, 2018, 10:28:39 AM »
Do I need to roll that 13k into another 401k or are the taxes on converting the 13k minimal?

It will be taxed as ordinary income, so whatever your marginal tax rate is (unless you get pushed into a higher tax bracket). For example, if your marginal tax bracket was 24% it would be 13000*.24=3120, which may or may not seem minimal to you.

RJC

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Re: Help w/ Backdoor Roth
« Reply #2 on: December 27, 2018, 02:42:00 PM »
Do I need to roll that 13k into another 401k or are the taxes on converting the 13k minimal?

It will be taxed as ordinary income, so whatever your marginal tax rate is (unless you get pushed into a higher tax bracket). For example, if your marginal tax bracket was 24% it would be 13000*.24=3120, which may or may not seem minimal to you.

$3120 is not minimal. I will try to roll it into another account if possible. Thanks!

jacoavluha

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Re: Help w/ Backdoor Roth
« Reply #3 on: December 28, 2018, 02:14:36 PM »
at this late date you should probably just plan to do your 2018 contribution and Roth conversion after 1/1/19. You have until your tax filing deadline to do the 2018 contribution. That way, you have until 12/31/19 to get your rollover IRA moved to a 401k or somewhere, so as not to have your backdoor Roth conversion subject to pro rata taxation.