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Convert Traditional IRA to Roth?

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  • Convert Traditional IRA to Roth?

    I am currently a fellow in a high earning specialty. I married a low income earner during residency. Together, we have about 25,000 in TIRA assets (she 20, me 5). Clearly, Roth's are the best option and I have been contributing to one since before we met. Once I am out of fellowship in a year and can no longer do direct Roth from an income perspective, it will be time for us to do backdoor Roth. To do such, will have to convert our outstanding TIRAs to Roths and take that tax hit. In the long run, this is still the smart move, right? Would then plan on doing maxed out backdoor Roths for myself and spouse every year. Is there any benefit to leaving her traditional IRA alone and just do backdoors for myself?

    Thanks.

  • #2
    you need to have a guess at your marginal federal plus state tax rate for 2019, to figure out the tax cost of a Roth conversion in 2019. It may very well be the smart thing to do.

    But converting isn't the only option, you and spouse may have workplace retirement plans in future where tIRA could be rolled into thus clearing the door for backdoor Roth.

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    • #3
      Thanks Jaco, good point on the other option.

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      • #4
        I would shy away from waiting too long before you find yourself in a higher bracket.  Even that 1st year where you only have a half year of attending income, you will likely be paying substantially more to convert.

        It seems like few workplace plans accept outside cash.  I don't have stats to back that up, but it seems like it is rare in my anecdotal experience.

        If you plan on being married a long time , I'd want to do roths for both spouses and not just one.  It will (obviously) double your backdoor roth space.

        I converted probably $10k of IRA to Roth.  Luckily we over-withheld that year and the tax return pain was minimized, but I was kicking myself that I did it in a higher bracket than I should have.

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        • #5
          https://www.whitecoatinvestor.com/roth-conversions/

          Rolling your TIRA into your employer 401(k), if available, is also a good option.
          Helping those who wear the white coat get a fair shake on Wall Street since 2011

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          • #6


            To do such, will have to convert our outstanding TIRAs to Roths and take that tax hit. In the long run, this is still the smart move, right?
            Click to expand...


            If you're going to pay conversion taxes at one of the top marginal brackets, a better option might be to roll your Traditional IRAs into your employer plans. That will also clear the deck for your Backdoor Roth strategy.

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            • #7




              I am currently a fellow in a high earning specialty. I married a low income earner during residency. Together, we have about 25,000 in TIRA assets (she 20, me 5). Clearly, Roth’s are the best option and I have been contributing to one since before we met. Once I am out of fellowship in a year and can no longer do direct Roth from an income perspective, it will be time for us to do backdoor Roth. To do such, will have to convert our outstanding TIRAs to Roths and take that tax hit. In the long run, this is still the smart move, right? Would then plan on doing maxed out backdoor Roths for myself and spouse every year. Is there any benefit to leaving her traditional IRA alone and just do backdoors for myself?

              Thanks.
              Click to expand...


              convert it this year. you were a resident for half, and a fellow for half.

              next year youll be an attending for half, so not as ideal.

              no, you need to do rIRA for both of you, every year.

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