Post by daisypaloma on Feb 18, 2016 1:25:58 GMT -5
I just realized we need to start doing this for 2016. I'm a little overwhelmed. A few questions:
1. During the start of your backdoor Roth did you use an existing IRA and just added to it? Or did you open a completely separate IRA account for the purpose of doing backdoor towards the end of the year? Or did you just start a Money Market/Checking/Savings account and transfer the $ at the end of the tax year?
2. When did you roll over? After tax return filing or before?
3. Are you partially phased out?
4. What do you include in your MAGI? Salary? Interest? Dividends? Rental?
I am not an expert but I think if you have any traditional IRAS you have to roll everything. So of ou have 20k in an Ira and you put in 5.5k you are going to have to convert all 25.5k.
Like the pp mentioned if you have an existing IRA the tax implications are more complicated:.
I think this article does a pretty good job discussing the tax angle and recommends making the conversion before you file your taxes so you don't have to worry about it the next year:
1. During the start of your backdoor Roth did you use an existing IRA and just added to it? Or did you open a completely separate IRA account for the purpose of doing backdoor towards the end of the year? Or did you just start a Money Market/Checking/Savings account and transfer the $ at the end of the tax year?
I'm not 100% sure what you're asking. I used funds from my existing traditional IRA account. I didn't have a Roth IRA before I started converting, so I opened a new account. In subsequent years, I added to that Roth account.
2. When did you roll over? After tax return filing or before?
I don't think you can convert after tax filing, otherwise your 8606 won't be correct. (I mean, you can, but I guess you'd have to amend that form.)
3. Are you partially phased out?
No, totally phased out.
4. What do you include in your MAGI? Salary? Interest? Dividends? Rental?
I am not an expert but I think if you have any traditional IRAS you have to roll everything. So of ou have 20k in an Ira and you put in 5.5k you are going to have to convert all 25.5k.
Not at all. You can definitely do a partial Roth conversion.
Correct, you'd just pay taxes based on the percentage of pre-tax money.
For example, if you have $15,000 in pre-tax money in a traditional IRA account, and you add a $5,000 nondeductible contribution, you can't elect to just convert the nondeductible dollars. If you convert $5,000 to a Roth, you'll pay taxes on $3,750 (75% of the dollars).