Dividend Growth Forum
Backdoor ROTH IRA conversion? - Printable Version

+- Dividend Growth Forum (http://DividendGrowthForum.com)
+-- Forum: Other Dividend Growth Forum Stuff (http://DividendGrowthForum.com/forumdisplay.php?fid=18)
+--- Forum: Off Topic (http://DividendGrowthForum.com/forumdisplay.php?fid=24)
+--- Thread: Backdoor ROTH IRA conversion? (/showthread.php?tid=1954)



Backdoor ROTH IRA conversion? - ken-do-nim - 02-17-2021

Have any of you ever done it?

I'll be opening up an IRA account soon and putting post-tax dollars into it, so that I can then move the funds into my ROTH IRA.  Seems super weird that you can just override the income limits by moving the money first into another account.  How long did you let the funds sit in the regular IRA before moving them to the ROTH?


RE: Backdoor ROTH IRA conversion? - fenders53 - 02-17-2021

(02-17-2021, 07:41 AM)ken-do-nim Wrote: Have any of you ever done it?

I'll be opening up an IRA account soon and putting post-tax dollars into it, so that I can then move the funds into my ROTH IRA.  Seems super weird that you can just override the income limits by moving the money first into another account.  How long did you let the funds sit in the regular IRA before moving them to the ROTH?
What are you over-riding?  The regular IRA contribution limit, or the Roth.  If the Roth, you've already paid the taxes so not sure why they would care?  I haven;t invested new money in my IRAs for years. There is a separate limit for ROTH and Traditional?

Chad is our forum tax expert.  Shoot him a PM if he misses this.


RE: Backdoor ROTH IRA conversion? - ken-do-nim - 02-17-2021

From https://www.irs.gov/newsroom/new-income-ranges-for-ira-eligibility-in-2021

Here are the traditional IRA phase-out ranges for 2021:
$66,000 to $76,000 – Single taxpayers covered by a workplace retirement plan.

Here are the income phase-out ranges for taxpayers making contributions to a Roth IRA:
$125,000 to $140,000 – Single taxpayers and heads of household.


RE: Backdoor ROTH IRA conversion? - ChadR - 02-17-2021

I have a few clients that do this. One thing, make sure that you don't intermingle this with other Traditional IRA accounts before you convert. If you don't have any other trad IRAs it's the easiest and cleanest way to do it. You can make the conversion the same day, but how long it has to be in the IRA before converting to a ROTH is mainly determined by who your IRAs are with. Some companies make you wait a day or up to a week. Have the money sitting in cash while in the IRA. Don't try to make a quick buck if they make you wait for a week. And as always the CYA, "Talk to your tax advisor for more details and to see if this will work for you."


RE: Backdoor ROTH IRA conversion? - ken-do-nim - 02-17-2021

(02-17-2021, 04:10 PM)ChadR Wrote: I have a few clients that do this.  One thing, make sure that you don't intermingle this with other Traditional IRA accounts before you convert.  If you don't have any other trad IRAs it's the easiest and cleanest way to do it.  You can make the conversion the same day, but how long it has to be in the IRA before converting to a ROTH is mainly determined by who your IRAs are with.  Some companies make you wait a day or up to a week.  Have the money sitting in cash while in the IRA.  Don't try to make a quick buck if they make you wait for a week.  And as always the CYA, "Talk to your tax advisor for more details and to see if this will work for you."


Thanks Chad!  Yeah I don't have a traditional IRA account so this should be clean and easy.  I'm really looking forward to doing this.