This is correct.I’ve recently been researching the back door Roth IRA concept. I believe I have a plan that works, but hoping to vet it with this community to make sure I don’t mess up. Here is the situation:
1. I have an existing traditional IRA funded with after tax dollars. It was set up and funded several years ago. I recently made contributions for 2023 and 2024. It has a modest built in gain.
2. I have a separate pre-tax IRA.
3. I have a 401K at work and within that have a self-directed brokerage account (Fidelity).
This is what I’m thinking I need to do:
1. Reverse roll over my existing pre-tax IRA into my current 401K at work. The plan administrator says this is possible.
2. Convert the other IRA (which consists of post-tax dollars) to a Roth IRA.
a. It is my understanding that this step will subject me to tax on the built in gain in this account. Is this correct? It’s a small gain, so this wouldn’t be an impediment.
Does this all sound right? Any other watchouts I should have on my radar?
And looking into 2025, mechanically how would I execute a back door for the 2025 contribution?
Thanks in advance.
Do you have the history of the non-ductible contributions made to the IRA funded with after-tax dollars documented using Form 8606 filed in those years with the IRS?
You will need that to properly do your taxes and avoid taxes on the portion of the Roth conversion that is made up of the after-tax contributions. The gains, as you mention, will be taxed.
Statistics: Posted by marcopolo — Sun May 19, 2024 10:54 pm — Replies 2 — Views 101