How do you do the back door Roth IRA if you already have money in traditional Ira
I think you have to put money in your traditional Ira and then just transfer the money to your Roth right? But I already had money in the traditional Ira. Would I have to sell all of it and get a penalty?
Move the IRA funds into your employer's 401(k). No taxable event. Then you have no IRA balance and can do the backdoor cleanly.
Yes. The normal steps are - put money into traditional IRA - transfer money from traditional IRA to Roth IRA If you already have money in the traditional IRA and it’s all pre-tax money (as in it’s from a 401k rollover or you deducted the traditional IRA contribution from your taxable income in a previous year) then the steps are - roll pre-tax money from traditional IRA into company 401k if allowed - follow the steps for a normal backdoor Roth IRA
Thanks, would it work if I put post tax money into my traditional Ira? All of my contributions were from post tax income
If all the contributions in the traditional IRA are post tax and were never deducted from taxable income then just transfer them to the Roth IRA and that’s it
Roll it into a 401k is the best path You can also convert the traditional IRA and pay income taxes on the conversion Or pay pro rata taxes on the backdoor conversion until you do one of the above
+1 Traditional IRA -> 401k. Downside is fund choices in your 401k is probably worse than IRA. Then do the backdoor IRA with no penalty.
@uber - Just piggy back on op’s question, i have 2 ira accounts, do I need to make sure both ira accounts balance is $0? Or can I just use the ira account that has $0 balance for the backdoor conversion? Who should i talk with for the backdoor conversion work? Is it the broker? Thanks!