I am relatively new to this forum and I am learning a few things still.
I have been maxing out my pre-tax 401k contributions for several years now, but any additional savings I have currently go into my taxable account. (an additional 10-15k per year approx.).
I have not been doing traditional IRAs lately and not eligible to contribute to Roths directly, but I do have some old tIRAs from a decade back with a combined value of about $40k.
I understand that if I start "backdoor" Roth conversions going forward, the $40k in tIRA would trigger "Pro-rata" rules.
So I am considering rolling over the $40k IRA into my 401k first to avoid that undesirable situation.
Fidelity says it is possible to rollover - I just need to request the other brokerage (ETrade) to sell my tIRA positions and send me a check favoring "Fidelity 401k account.." (corrected - NOT Roth) . Since the check is not directly favoring me it will not be considered a distribution / taxable event with penalties.
Here are my questions -
1. Has anyone done such a rollover before (tIRA to t401K) - any tips, do's or don'ts would be greatly appreciated.
2. Assuming the rollover is successful and complete before Dec 31st of this year, does it allow me to start backdoor Roth conversions this year (2024) or starting next year (2025). Based on what I read it would be this year itself, but wanted to double check.
3. Is it really worth the hassle, or should I just keep investing the excess savings in my taxable account.
4. The reason the backdoor Roth sounds appealing to me is that I will be adding some "tax diversity" to my portfolio, and also the funds will grow tax free, no tax impact on rebalancing events, and no taxes on withdrawals. Anything I am missing ? Any disadvantages I am not aware of ? (I know I cannot withdraw the Roth IRA funds until after age 59.5 - that is 10 years away for me, and I am perfectly ok with that)
I have been maxing out my pre-tax 401k contributions for several years now, but any additional savings I have currently go into my taxable account. (an additional 10-15k per year approx.).
I have not been doing traditional IRAs lately and not eligible to contribute to Roths directly, but I do have some old tIRAs from a decade back with a combined value of about $40k.
I understand that if I start "backdoor" Roth conversions going forward, the $40k in tIRA would trigger "Pro-rata" rules.
So I am considering rolling over the $40k IRA into my 401k first to avoid that undesirable situation.
Fidelity says it is possible to rollover - I just need to request the other brokerage (ETrade) to sell my tIRA positions and send me a check favoring "Fidelity 401k account.." (corrected - NOT Roth) . Since the check is not directly favoring me it will not be considered a distribution / taxable event with penalties.
Here are my questions -
1. Has anyone done such a rollover before (tIRA to t401K) - any tips, do's or don'ts would be greatly appreciated.
2. Assuming the rollover is successful and complete before Dec 31st of this year, does it allow me to start backdoor Roth conversions this year (2024) or starting next year (2025). Based on what I read it would be this year itself, but wanted to double check.
3. Is it really worth the hassle, or should I just keep investing the excess savings in my taxable account.
4. The reason the backdoor Roth sounds appealing to me is that I will be adding some "tax diversity" to my portfolio, and also the funds will grow tax free, no tax impact on rebalancing events, and no taxes on withdrawals. Anything I am missing ? Any disadvantages I am not aware of ? (I know I cannot withdraw the Roth IRA funds until after age 59.5 - that is 10 years away for me, and I am perfectly ok with that)
Statistics: Posted by friluftsliv-roy — Sat Oct 26, 2024 2:13 pm — Replies 11 — Views 517