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Questions tagged [roth-conversion]

A Roth conversion refers to taking all or part of the balance of an existing traditional IRA and moving it into a Roth IRA.

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What is a roll-over to a Roth account?

I don't qualify for contributing directly to Roth accounts. I keep hearing about roll-overs but I don't understand how roll-overs interact with my current accounts. Do I pay taxes on my money (or ...
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122 views

Can you fix a rollover that went into a Roth IRA and put it into a regular IRA?

If someone, in the process of leaving a job last summer, rolled over their 401K into a Roth IRA and is now looking at a several thousand dollar tax bill, is there any way to salvage that by ...
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68 views

Roth IRA Conversion vs Recharacterization

Despite trying to hit the nail on the head, I managed to put more into my Traditional IRA for 2018 than I will be able to deduct due to Traditional IRA phaseout limits. The last thing I want is to ...
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1answer
34 views

Clarification regarding disqualified income for Earned Income Credit (EITC or EIC)

I'm a graduate student with several kids. Right now I'm trying to leverage my temporarily diminished income by "backdoor" rolling-over my 401k account to a Roth IRA account, without inadvertently ...
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74 views

Rollover from a Traditional IRA to ROTH IRA

I have a few thousands of dollars contributed to a Traditional IRA over 2016, 2017 and 2018. These contributions are post-taxed dollars and I have not deducted them from the IRA contributions (Since ...
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1answer
461 views

Can you immediately withdraw contributions to a mega backdoor Roth IRA without penalty?

My company allows us to do in-service conversions such that we can use mega backdoor Roth. If I convert my after tax contribution upon every paycheck into a Roth IRA (so this is pure after tax ...
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2answers
150 views

Is there any upside in electing to have federal taxes withheld during a traditional IRA to Roth IRA conversion?

When converting a traditional IRA to a Roth IRA at Fidelity, one is given the choice to either: elect not to have federal taxes withheld and continue my conversion online. elect to have federal taxes ...
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Why does Vanguard take over one day to convert after-tax 401(k) to 401(k) Roth within one's plan?

Why does Vanguard take over one day to convert after-tax 401(k) to 401(k) Roth within one's plan? Why isn't it faster, or even immediate? For example, if one initiate the conversion on Saturday noon ...
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Can I withdraw a conversion to a Roth IRA without penalty?

Several years ago I converted some money from both Traditional and SEP IRAs to my Roth IRA. I paid taxes on the money I converted at the time. I know that a Roth IRA allows you to withdraw ...
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Does basis remain in Traditional IRA after a complete conversion?

If you convert your entire Traditional IRA to Roth IRA, but the amount you convert (the value of the Traditional IRA at the time you convert) is less than the basis (after-tax amount) in the ...
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83 views

How to use a business loss to convert a traditional to a Roth IRA?

I have an annual business loss on a C-corp business I own. Is it possible to use that loss to convert traditional pretax IRA funds over to Roth IRA?
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How to convert a Traditional IRA contribution from 2016

Here's some background information about Dave For 2016, Dave has Worked for a company (say, Employer A) that offered a 401k and he contributed to it. Say the balance of the 401k is $30k. Also ...
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124 views

Roth IRA recharacterization

If you converted from IRA to Roth on November 30, 2017 and then did a recharacterization on December 22 2017 (didn't know there was a time frame of 30 days or until 2018 before recharacterization). ...
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2answers
539 views

Mega backdoor: After-tax 401k -> Roth IRA in employer's plan while having an existing pre-tax traditional IRA with a different institution

I've read up on the mega backdoor - the limits, the rules, 55k IRS limit (for 2018), how withdrawals work etc. While going through all of it I happened to come across some people saying - to avoid tax ...
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281 views

How much can I roll over (and how often) for a mega backdoor roth?

My goal is to contribute more in after-tax dollars to my 401k plan and roll that into a Roth IRA. But I can't find anything that describes how much or how often. Can I move all my after-tax ...
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If I have a 401k and a traditional IRA, am I at risk of paying double taxes if I convert to a Roth IRA?

I started with a traditional IRA that I contributed the maximum amount to for a few years. Then I get a 401k and started contributing to that. I also continued to contribute to my IRA, but it was no ...
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146 views

Should I wait until next year to convert my IRA to Roth?

I'm considering changing my IRA into a Roth IRA. As I understand it, I'll need to pay taxes on all the money I convert. Since the tax brackets for next year will be lowered across the board, does it ...
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135 views

Is there any downside in converting a traditional IRA account to a Roth IRA, if the contributions to the traditional IRA cannot be deducted?

Is there any downside in converting a traditional IRA account to a Roth IRA, if the contributions to the traditional IRA cannot be deducted? Let's assume that the traditional IRA account hasn't made ...
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Does moving a traditional IRA to a Roth IRA have to be done in the same institution?

Does moving a traditional IRA to a Roth IRA have to be done in the same bank? I'm asking as I read on https://www.merrilledge.com/retirement/transfer-ira (mirror): Customer service: You can open ...
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190 views

Calculating tax on 401(k) to Roth IRA conversion

I understand that doing a conversion from a 401(k) into a Roth IRA is a taxable event. I'm trying to understand the details of how this is taxed. Many resources, including this answer and this blog ...
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120 views

How can one convert, penalty-free, a traditional, pretax 401(k) to a Roth IRA, without being 59.5 or leaving one's job?

I wrote in one question (mirror) that: A traditional, pre-tax 401(k) may be rolled over to a traditional IRA or Roth IRA if older than 59.5-year-old or if leaving one's job. Someone commented ...
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651 views

Can one roll over an after-tax 401(k) to a Roth IRA, then any time in the future withdraw my contributions tax-free and penalty-free?

Can one roll over an after-tax 401(k) to a Roth IRA, then any time in the future withdraw one's contributions (that were initially made to the after-tax 401(k)) tax-free and penalty-free? Background ...
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409 views

When rolling over a Roth 401(k) to a Roth IRA, does one have to pay any tax?

When rolling over a Roth 401(k) to a Roth IRA, does one have to pay any tax as a result of the transfer? For example, are the earnings resulting from the Roth 401(k) investments taxed when transferred ...
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1answer
418 views

Why would an employer not allow their employees to perform a “mega Roth IRA backdoor” (i.e., convert from an after-tax 401(k) to a Roth IRA)?

My employer offers a 401(k) plan through Vanguard to its employees. There exist two types of Roth IRA Rollover: Convert from a non-deductible traditional IRA to a Roth IRA (a.k.a., "Roth IRA ...
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1answer
403 views

Avoiding taxes on backdoor Roth IRA conversion

I have 4 accounts: Vanguard traditional IRA with ~$90k in it Vanguard Roth IRA ~$25k in it Vanguard 401k from a former employer that has ~$40k in it Mass Mutual 401k from current employer that has ~...
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What are the pros/cons of Roth IRA Rollover from a traditional IRA vs. from an after-tax 401(k)?

There exist two types of Roth IRA Rollover (a.k.a., Roth IRA backdoor): Convert from a non-deductible traditional IRA to a Roth IRA Convert from an after-tax 401(k) to a Roth IRA What are the pros/...
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3answers
1k views

Mega Backdoor Roth: Withdrawal consequences for in-plan vs out-of-plan conversion

My employer allows after-tax 401k contributions, and has an option for automatic quarterly after-tax 401k -> Roth 401k in-plan conversions. The other option for executing the mega backdoor Roth is to ...
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1answer
496 views

Mega backdoor Roth: Is there a 10% penalty if I withdraw from a Roth IRA after an in-service conversion from after-tax 401(k)?

My question is whether I face a 10% penalty on withdrawing money from a Roth IRA after a mega backdoor Roth. Assume I am younger than 59 years old. In more detail: I contribute $10K after-tax to my ...
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67 views

Back Door Roth Conversion eligibility

I would like to make back door Roth contributions, but I have 2 old SEP IRA annuities ( non-qualified) and I am currently drawing $5,000/year on a third small annuity that will continue until I am 69....
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Transferring IRA funds into Spousal Roth IRA

I have a Variable Annuity IRA from which I am taking distributions which exceed my RMD. That excess distribution has been previously rolled over into my Roth IRA. Is it allowable to roll over these ...
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550 views

Why do Roth IRAs have income limits if you can just do a backdoor IRA contribution?

As we all know, Roth IRAs have income limits that prohibit individuals from contributing to a Roth IRA if their Modified Adjusted Gross Income is over a certain limit ($133,000 for individual ...
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2answers
737 views

Roth 401k Contribution limits reset on job change

I am in my late 20s and am a single filer in US. My current employer and future employer(July '17) both provide Roth 401k plans from the same provider(Fidelity). I am deciding between a)rolling over ...
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1answer
86 views

When doing a Roth conversion, is amount converted after tax?

For example, if I convert $30,000 from my Traditional IRA to Roth IRA and that incurs $3,000 in taxes as a result, do I: pay taxes on the amount that goes into the Roth IRA, meaning my Roth IRA ...
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96 views

Roth Backdoor and Self Employment Taxes

I am currently a graduate student in software while doing a self employed contracting gig. As such, I've been using primarily my SEP IRA and Traditional IRA accounts to avoid the heavy self employment ...
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1answer
61 views

Will the Non-Deductible Basis be considered for a Backdoor-Rollover even if it originates afterwards?

Trying to file taxes, I stumbled over a strange behavior of the software, and now I am wondering if this is actually the IRS regulation or just a bug. Assume this situation: On Jan/1 of 2016, X. has ...
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270 views

Is it better to wait for a market downturn to do a Roth conversion?

Based on this article from Fidelity, it appears that the tax basis for a Roth conversion is the net value of the retirement account at the time of the conversion. As such, let's say I have a ...
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51 views

Roth Conversion Value

Is the conversion value I use to complete Form 8606 the value of the statement on the rollover date (say I roll it over today - 3/31/2017) or would it be the value on the year end statement (12/31/...
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2answers
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Clarifying Taxes on Roth IRA Rollover

My wife is planning to roll over her entire Traditional IRA to a Roth IRA using the backdoor form 8606. We are trying to determine if we need to pay taxes on just the deductible contributions made ...
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1answer
80 views

Can I still convert a tradtional IRA into a Roth IRA for my 2016 taxes?

I found this similar question, but the comments made to the one and only answer is confusing my understanding of it... Right now I just have one traditional IRA that I opened in 2016, funded from a ...
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2answers
104 views

Strategic rollover from traditional to Roth IRA for a young person (pre-retirement)

So we have this: Contributions to traditional IRA: Pre-tax Distributions from traditional IRA: Taxed at the time of distribution Contributions to Roth IRA: Post-tax Growth and distributions (...
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1answer
515 views

Backdoor Roth IRA conversion deadline and taxes?

I had no previous IRA accounts but this year I deposited $5,500 in March, 2016 into a 2015 Traditional IRA contribution. Then in that same month, I did a backdoor conversion to a Roth IRA account for ...
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3answers
1k views

Employer offering Roth 401k as well as traditional 401(k), established in career

I am 33 years old and currently enrolled in my employers traditional 401(k) plan where I am putting 4% of my salary pre tax and having a maximum of 4% employer match into my plan. After 6 more months ...
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2answers
334 views

Is withdrawing principal from Roth-IRA that is from a 401K rollover considered penalty and tax free?

I have a Roth IRA that took its initial contribution as a rollover from a 401k I had with a previous employer. Since the old 401k's contributions were tax-free I ended up paying income tax on the ...
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1answer
104 views

Roth conversion with low income

I am a U.S. citizen currently living outside the United States, where I am a student finishing a university degree. I have a small, U.S.-based income ($17k in 2015), and no foreign income. My total ...
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1answer
136 views

Should I convert Traditional IRA to Roth IRA in 2016? (25% tax bracket)

I'm married, in my late 20's and we're considering converting a Traditional IRA to a Roth IRA this year (end of 2016). There's about $7k in the Traditional IRA. Our combined income puts us in the 25% ...
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1answer
50 views

Can I recharacterize my Roth since my income this year is foreign?

I moved abroad a couple years ago, but 2015 is the first year that I am claiming to be a bona fide foreign resident. I have been contributing to a Roth IRA for years. Filling out my return this year, ...
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2answers
483 views

Ordering of backdoor Roth conversion and rolling over 401k?

I have two retirement accounts: Traditional IRA funded with non-deductible contributions 401k I left my job so I want to roll over my 401k into a Rollover IRA, but I've also heard about the benefits ...
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1answer
125 views

What do I do now if I contributed to Roth IRA in 2012-2013 and my MAGI exceeded the limit?

In 2013 I opened a Roth IRA for year 2012, contributing $4000 for year 2012. In 2014 I contributed $5500 to that same Roth IRA for year 2013. In 2015, I realized I was not eligible to contribute to ...
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1answer
110 views

If I auto deposit every week into a Traditional IRA, can I keep doing a backdoor conversion to a Roth IRA every week?

If I auto deposit every week into a Traditional IRA, can I keep doing a backdoor conversion to a Roth IRA every week? How does that affect my taxes? Do I get taxed on the earnings each weekly deposit ...
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1answer
83 views

Same day Roth IRA conversion but lost some money -> How do I list that on my taxes?

I contributed in March 2016 for my 2015 Traditional IRA and then a day later I converted that 2015 IRA into a backdoor 2015 Roth IRA but lost some money in the day I waited to convert. I'm about to do ...