Author Topic: Traditional, Roth and Backdoor Roth Q's  (Read 2718 times)

bkmnky72

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Traditional, Roth and Backdoor Roth Q's
« on: March 03, 2016, 03:52:43 AM »
So we may not meet Roth requirements this year (the blessing and curse of our new rental).  Need help:

Currently:

I have Roth with Fidelity, Spouse with Merrill Lynch
I also have old Traditional IRA's (2) with local credit union making zero interest, totaling $4K
I also have old traditional IRA with Fidelity (before opening said Roth), $2K

If I stop our Roth contributions this year, and switch to traditional IRA with the hopes of doing backdoor Roth at the end of the year, do we:

1.  Roll over ALL old traditional IRA's to Roth first
2.  Create a new IRA account for dear spouse and myself separately, with the hopes of rolling over all or most of the Roth contributions and earnings to Roth at the end of the year?

I have so many questions and there's probably more info needed, so let me know.  Any help/insight is appreciated!
 

Libertea

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Re: Traditional, Roth and Backdoor Roth Q's
« Reply #1 on: March 04, 2016, 10:58:21 PM »
If there is any chance that you might be backdoor Rothing it this year, you should roll over all of your current tIRA funds into your Roth this year along with your new tIRA contribution.  If you don't roll all the money in all of your tIRAs over together, you will have to pay the pro rata taxes.  See this site for further explanation about this:

https://www.bogleheads.org/wiki/Backdoor_Roth_IRA

MDM

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Re: Traditional, Roth and Backdoor Roth Q's
« Reply #2 on: March 04, 2016, 11:06:00 PM »
If there is any chance that you might be backdoor Rothing it this year, you should roll over all of your current tIRA funds into your Roth this year along with your new tIRA contribution.  If you don't roll all the money in all of your tIRAs over together, you will have to pay the pro rata taxes.  See this site for further explanation about this:

https://www.bogleheads.org/wiki/Backdoor_Roth_IRA

Just to clarify, if you roll over all of your current tIRA funds into your Roth this year you will pay tax on that entire amount.  This is irrespective of what you do with your new tIRA contribution.

Putting your current tIRA funds into a 401k will avoid the pro rata issues with the backdoor Roth.

bkmnky72

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Re: Traditional, Roth and Backdoor Roth Q's
« Reply #3 on: March 06, 2016, 09:34:16 AM »
If there is any chance that you might be backdoor Rothing it this year, you should roll over all of your current tIRA funds into your Roth this year along with your new tIRA contribution.  If you don't roll all the money in all of your tIRAs over together, you will have to pay the pro rata taxes.  See this site for further explanation about this:

https://www.bogleheads.org/wiki/Backdoor_Roth_IRA

Just to clarify, if you roll over all of your current tIRA funds into your Roth this year you will pay tax on that entire amount.  This is irrespective of what you do with your new tIRA contribution.

Putting your current tIRA funds into a 401k will avoid the pro rata issues with the backdoor Roth.

Thanks.  I unfortunately don't have 401k to roll over into, so it looks like I'd have to roll over to my Roth.