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Backdoor Roth conversion question
Posted on 3/30/19 at 12:10 pm
Posted on 3/30/19 at 12:10 pm
Can this be as simple as setting up a Traditional IRA, making contributions, and then transferring said funds over to a Roth IRA (with tax implications of course)? I've seen reference to this being a full fledged conversion of an account, but that seems like a minor annoyance if done on an annual basis.
5
Posted on 3/30/19 at 12:18 pm to Lou Pai
It was very easy to do on Vanguard. Opened the IRA and within 2 days or so of putting money in, I was able to easily convert it to my current Roth IRA.
Posted on 3/30/19 at 12:19 pm to Lou Pai
After I contributed to my traditional, I called my bank and told them what I wanted to do and they handled it instantly. It was easy as pie.
It made filing my taxes this year a little tricky though.
It made filing my taxes this year a little tricky though.
Posted on 3/30/19 at 9:44 pm to indytiger
What made the taxes tricky if you don’t mind me asking
Posted on 3/30/19 at 10:45 pm to GulfCoastPoke
quote:
What made the taxes tricky if you don’t mind me asking
I know it can be a bit cumbersome to do it on tax software but luckily there are more than a few step by step instructions people have posted online.
When you first start doing in the software shite gets really weird and then it works out at the end.
Posted on 3/31/19 at 9:58 am to Lou Pai
Do you just transfer funds over the course of the year or do it all at once after opening the traditional IRA? Before converting of course.
Posted on 3/31/19 at 10:07 am to metallica81788
Posted on 3/31/19 at 11:51 am to Lou Pai
Vanguard straight up has a link on the account that says "transfer to Roth IRA"
The White Coat guide is a good read. Pay attention to the tax consequences and required forms.
The White Coat guide is a good read. Pay attention to the tax consequences and required forms.
Posted on 3/31/19 at 1:53 pm to Lou Pai
So is there any change to how this is done in subsequent years? You set up a new traditional IRA and after a couple days, transfer it into your other Roth IRA?
Posted on 3/31/19 at 3:30 pm to Azazello
I guess my question is, do I need to create a Traditional IRA and then convert it to a Roth every year?
Posted on 3/31/19 at 5:48 pm to Lou Pai
I guess my question is, do I need to create a Traditional IRA and then convert it to a Roth every year?
quote:
You can do a backdoor Roth IRA in one of two ways. The first method is to contribute money to an existing Traditional IRA, sell shares, and then roll over the money to a Roth IRA account. Or, you can convert an entire Traditional IRA account to a Roth IRA account. Your bank or brokerage should be able to help you with the mechanics. Your Traditional IRA doesn’t have to be new. You can roll over existing Traditional IRA money—or an old Traditional IRA account—into a Roth.
Posted on 3/31/19 at 10:22 pm to Lou Pai
I've been doing it a few years now at Vanguard.
My traditional is at $0 99% of the year and Vanguard doesn't close it. They are well aware of the strategy as people have mentioned.
Money goes in, goes over to my ROTH, then invest from there. Traditional chills for another 358 days or so.
My traditional is at $0 99% of the year and Vanguard doesn't close it. They are well aware of the strategy as people have mentioned.
Money goes in, goes over to my ROTH, then invest from there. Traditional chills for another 358 days or so.
This post was edited on 3/31/19 at 10:23 pm
Posted on 3/31/19 at 11:16 pm to Teddy Ruxpin
Thank you mates
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