I have a W2 job where the owner contributes 20% of pay into my SEP IRA. Because of this, it is my understanding that I can not do a Backdoor Roth IRA with a balance greater than 0 in the SEP IRA (or any other Trad IRAs) on December 31st. If the balance is 0 on December 31st, one can do a Backdoor Roth IRA for that tax year.
I plan to do a side hustle and receive a 1099. My plan is to be able to do a Backdoor Roth IRA, as well as a Mega Backdoor Roth. I would open a Solo 401k from somewhere like mysolo401k.net, to allow MBR. Contribute $23k/yr as employee, plus 20% profit sharing as employer, plus the rest into after tax non Roth up to the $69k limit and convert to Roth.
I would still have employer contributions from my W2 job going into the SEP IRA. My plan for that would be to rollover the entire SEP IRA every year into the Solo 401k at the end of December, after the December contribution hits my account in mid December, so that there's a 0 balance in the SEP IRA by December 31st. This should allow me to also do a Backdoor Roth IRA again.
1. Just want confirm, since one is a W2 employer and the other would be a separate business that I own with 1099 income, that I can in fact maintain both accounts in the same year.
2. Some years I hit the max contribution for SEP IRA in November or even October and some years it may not be until December. I'm curious to know if anyone knows if rolling over a SEP IRA at Fidelity into a Solo 401k also at Fidelity would be faster than being done at separate companies. From my experience, the funds usually leave the outgoing account the next day after a rollover form is received and based on my research, the IRS only requires a 0 balance in the SEP IRA on December 31st, so I don't think there would be a timing issue, with Dec contributions usually being no later than the 17th but wanted to know if anyone has experience with moving funds like this within 2 different Fidelity accounts and if it would be faster than usual.
I feel like I had another related question but I don't recall what it was right now so I guess that's all on this topic for now. Thanks!
I plan to do a side hustle and receive a 1099. My plan is to be able to do a Backdoor Roth IRA, as well as a Mega Backdoor Roth. I would open a Solo 401k from somewhere like mysolo401k.net, to allow MBR. Contribute $23k/yr as employee, plus 20% profit sharing as employer, plus the rest into after tax non Roth up to the $69k limit and convert to Roth.
I would still have employer contributions from my W2 job going into the SEP IRA. My plan for that would be to rollover the entire SEP IRA every year into the Solo 401k at the end of December, after the December contribution hits my account in mid December, so that there's a 0 balance in the SEP IRA by December 31st. This should allow me to also do a Backdoor Roth IRA again.
1. Just want confirm, since one is a W2 employer and the other would be a separate business that I own with 1099 income, that I can in fact maintain both accounts in the same year.
2. Some years I hit the max contribution for SEP IRA in November or even October and some years it may not be until December. I'm curious to know if anyone knows if rolling over a SEP IRA at Fidelity into a Solo 401k also at Fidelity would be faster than being done at separate companies. From my experience, the funds usually leave the outgoing account the next day after a rollover form is received and based on my research, the IRS only requires a 0 balance in the SEP IRA on December 31st, so I don't think there would be a timing issue, with Dec contributions usually being no later than the 17th but wanted to know if anyone has experience with moving funds like this within 2 different Fidelity accounts and if it would be faster than usual.
I feel like I had another related question but I don't recall what it was right now so I guess that's all on this topic for now. Thanks!
Statistics: Posted by SVT — Wed Jun 12, 2024 3:24 am — Replies 0 — Views 12