Hello,
Our income is above the limits to contribute to a roth or Traditional IRA and get a tax benefit. I was researching the backdoor roth idea. Problem is I have an old 401 in a traditional IRA, which would make for a very lousy tax. My current 401k will allow a IRA "roll in" and we have pretty good fund choices in there with respect to low expense ratios.
Here's what I have:
Old 401k in a traditional IRA at Vanguard: ~68k
Existing traditional IRA that was funded before we hit income limits :~9300k (this would have to be backdoored into the Roth over this year and next-right)
Current 401k: ~295k
Cost basis on the existing IRA is $7,400, so there's about 2k of gains that would be taxed, correct? I don't think it's possible to transfer it all to the backdoor roth in one year due to the contribution limits, so I'd have to spread it out over this year and next.
So I guess my question is is it worth it to move my old 401k into my current one and start the backdoor roth process and continue to exploit that loophole as long as it's available? I'm not sure how much tax i'd owe, I'm sure TurboTax can handle this, though.