I have been contributing to Roth IRA for several years now. At this point my income have jumped up so I cannot contribute to Roth IRA anymore, unless I use the backdoor. Currently, my tax rate is 24%. I am already contributing to Traditional IRA for this year on monthly basis.
Should I convert my traditional IRA to Roth IRA? If so when should I do this since I am contributing on monthly basis. What if my income will be lower at the time of retirement, will it still makes sense to convert Traditional IRA to Roth using the backdoor?
UPDATE: If I convert my total balance of Traditional IRA to Roth IRA then I will have to pay taxes on the earnings (since this is NOT pre-tax). At this point, what will happen to the traditional IRA account. Can I still contribute monthly to the traditional IRA and then convert it by the end of the year.
ANOTHER QUESTION: I contributed to Traditional IRA $6000 max (NOT pretax). If I convert traditional IRA to ROTH then will I still have to fill out form 8606.
QUESTION 4: Here is my situation. I have the following types of account.
Roll Over IRA - $100K (Not paid taxes) Traditional IRA - $6K (Paid taxes) Roth IRA - $10K (Paid taxes)
According to the text "When the IRS determines your backdoor Roth IRA conversion taxes, they will regard all of your current IRA accounts as one entity. This is known as the aggregation rule – no IRA stands alone; instead IRAs are regarded in the aggregate."
Does that mean if I convert my Traditional IRA account to Roth IRA, the Pro-Rata rule with apply since I have another IRA (Roll Over IRA)? If that happens I will end up paying more taxes.