I have a SEP-IRA from my consulting years, many years ago (I haven't contributed to it in years but it does have a balance).
I wanted to setup a backdoor Roth IRA conversion by creating Traditional IRA and Roth IRA accounts, transferring the $6k max to the traditional, and then doing the backdoor conversion to the Roth IRA. I've gotten as far as putting the $6k into the traditional IRA and I saw this article:
..there exists one important prerequisite to be able to properly execute the backdoor Roth.
You cannot have tax-deferred money in an IRA in your name.
That includes traditional IRA, SEP IRA, and SIMPLE IRA
So now I'm worried that I'm doing it wrong, since I have funds in the SEP-IRA (more than the 6k). Is this issue only if I've made contributions to the SEP-IRA this year?
If that's a problem, is it too late to perhaps roll the SEP-IRA into my 401k? Or if I can't do that and it's impossible for me to do a backdoor Roth, how do I back out of all of this? Can I just return the money from the traditional IRA back to my bank and simply do no IRA contributions this year?
A clarification based on the answer below. Here are my accounts:
- SEP-IRA: Funds from previous years (no contributions this year)
- Trad IRA: $6000, contributed post-taxes this year, waiting for conversion
- Roth IRA: $0, waiting for the conversion