Update (both to share info for others and so people can point out anything I have missed) :)
I am planning to go ahead with this plan before I quit my job in December. I have talked to both Fidelity (where my IRAs are) and Vanguard (which administers my employer's 401k plan). My advisor at Fidelity referred to the "Coffee in the Cream rule" which seems to be another term for the pro-rata rule for IRAs. Here are some links that I found:
https://www.fidelity.com/insights/retirement/what-is-a-backdoor-roth-irahttps://financialducksinarow.com/1707/turns-out-you-can-be-a-little-bit-pregnant/https://www.magnifymoney.com/blog/investing/rollover-ira-to-401k/My starting position is:
a) A rollover IRA at Fidelity (approx $750k). This is all pre-tax
b) A traditional IRA at Fidelity (approx $150k). About $60k of this is post-tax (I have the exact amount and have been reporting it as the basis to the IRS on form 8606)
c) A 401k with my current employer (approx $200k) (administered by Vanguard)
d) My earnings in 2019 will be too high to allow any regular Roth IRA contributions (not relevant to this process AFAIK)
e) I will be 59.5 at the end of the year (not relevant AFAIK)
So these are the steps that I plan to take:
1. Make my non-deductible IRA contribution of $7000 for 2019 to my Traditional IRA
2. Sell all stocks/bonds in both Fidelity IRAs so that everything is in cash reserves
3. Fill out two “One time withdrawal - IRA” forms with Fidelity (one for each of my IRAs)
Each will check the box “Direct rollover to work place retirement plan (such as 401k)”
The one for my rollover IRA will rollover all funds
The one for my traditional IRA will rollover everything except the post tax ($67k)
Have them send the checks to me but made payable to Vanguard FBO myself
4. Complete the online “Rollover money into this plan” on the Vanguard 401k site
5. Mail the rollover form and checks to Vanguard
6. Once the money has gone out of my Fidelity accounts do a Roth Conversion on my Traditional IRA
7. At this point I will have about $67k in the Roth IRA and $1,040k in 401k
7. Leave my company in December when I retire
8. There should be zero tax cost on my 2019 taxes for this process (though I will have to file the right form 8606)
8. After leaving (probably in 2020) rollover my 401k back to Fidelity into a new rollover IRA
In some ways all this effort seems a lot to get a small percentage of my retirement savings into a Roth IRA. But my thought process is:
a) It gets this amount out of RMD consideration thus reducing the RMDs when I hit 70.5
b) All future growth on this $60k will be non-taxable on withdrawal (it would not be if left in the traditional IRA)
c) I would probably not touch this money until after all other funds since it has no RMDs and is growing tax free
I’m curious what I will put on my 8606 for 2019. I guess I use line 8 to give the amount I converted to Roth and line 14 (total basis in traditional IRAs at the end of the year) should come out to zero. Also the taxable amounts (line 15c and 18 should be zero).
So that’s the plan. I’ll let you know how it goes!