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Roth conversion backdoor

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  • Roth conversion backdoor

    I am not eligible to contribute deductible IRA anymore due to income limit.I do have about 200K in my all IRAs combined out of which about 33K(16%) is non deductible contributions i have made in the past years with the hope to take advantage of BACKDOOR which i have not taken yet.My tax bracket is 35%.I want to take advantage of the backdoor rule by converting my non deductible contributions to ROTH but because of the aggregate rule,i am not able to do that because if i convert smaller amount for example 20K, then i will be converting only 3.2K(16%) of my non deductible amount.If i convert lager amount or all of my IRA amount so that i can take advantage of BACKDOOR conversions in future,that will through me into higher tax bracket.
    Any advice on how to handle this? Is converting smaller amount every year in a way not to cross the tax bracket until I convert everything to ROTH a good idea?
    Thanks for advice.

  • #2
    If you are currently in the 35% bracket, I don't think you should even convert to a Roth...

    Welcome to the board by the way.
    "Oh look another bajillion point declin-Ooooh!!! A coupon for pizza!!!!" <--- This is what everyone's IPS should be. ✓✓✓

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    • #3
      Do you have a 401k or 403b at work that accepts rollovers? If so, consider rolling your TIRA over to your employer account rather than converting.
      Financial planning, investment management and CPA services for medical and high-income professionals | 270-247-6087

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      • #4
        you really need to move that IRA money to a 401k, whether it's an i401k or one from your employer if you are a W2

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        • #5
          If you don’t have an employer 401k for rollover, you need to create 1099 earned income to establish an i401k. It would be worth the effort to make a couple grand to be eligible. Taking one week vacation and doing that solves your problem. Not at Vanguard. Use Fidelity or one of the others.

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          • #6
            Originally posted by Cubicle View Post
            If you are currently in the 35% bracket, I don't think you should even convert to a Roth...

            Welcome to the board by the way.
            Sorry for my ignorance. Why is that the case? Could you guide me to a resource where I can read about it? thank you.

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