Author Topic: Roll over IRA and additional contributions question  (Read 1170 times)

des999

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Roll over IRA and additional contributions question
« on: March 31, 2017, 06:48:09 AM »
I think I read some where that if you have a rollover IRA (from a previous employer) and you add any contributions to it, it can cause your earnings to become taxable, or basically that you should never co-mingle the monies.

Here is what I did, let me know if it could be a problem.  I rolled over an old 401k about 7 years ago.  I wanted to start contributing to a Roth, but for about 4 months I accidentally contributed pre-tax money to my rollover tira.  Once I realized what I was doing, I changed all distributions to my Roth, and have been that way ever since.  Again, this was about 7 years ago.

My tira (rollover) has just been sitting idle ever since, obviously it has grown over time, but I just wonder if I caused any tax headaches that I'll have to address at some point.

Thanks in advance.

MDM

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Re: Roll over IRA and additional contributions question
« Reply #1 on: March 31, 2017, 11:10:45 AM »
If you ever want to do a Backdoor Roth IRA, having money in a traditional IRA can be a problem.

See that link for more details.

des999

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Re: Roll over IRA and additional contributions question
« Reply #2 on: March 31, 2017, 11:27:49 AM »
thanks for that info, I don't plan to do one at this time, but good to know.

Do you know of any tax consequences related to contributed money (albeit only a couple thousand) to my roll over tira?  Would that cause any cap gains or other taxes that I need to be aware of. 

also, correction, it was after tax money contributed to my tira, so that is where the co-mingling of pre and post tax money might cause me issues?

MDM

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Re: Roll over IRA and additional contributions question
« Reply #3 on: March 31, 2017, 11:37:26 AM »
See Form 8606, Nondeductible IRAs.

You want to establish the fact that you have made non-deductible contributions to a traditional IRA.

If you don't establish that fact, withdrawals from that IRA will be treated as 100% taxable and you will pay more tax than necessary.

If you do establish that fact, your withdrawals will be taxed on the correct amount of taxable income.

des999

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Re: Roll over IRA and additional contributions question
« Reply #4 on: March 31, 2017, 11:38:57 AM »
See Form 8606, Nondeductible IRAs.

You want to establish the fact that you have made non-deductible contributions to a traditional IRA.

If you don't establish that fact, withdrawals from that IRA will be treated as 100% taxable and you will pay more tax than necessary.

If you do establish that fact, your withdrawals will be taxed on the correct amount of taxable income.

great, thank you for the advice.