Announcement

Collapse
No announcement yet.

Resident to Attending, What do I do with Roth IRA from Residency

Collapse
X
Collapse
First Prev Next Last
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • Resident to Attending, What do I do with Roth IRA from Residency

    Hello, I graduated Residency June 2019, started my Attending position August 2019.  I have a Roth IRA which I started during Residency with approx $16,300 in value.   My question is what do I now do with this account (through fidelity).  I have been hearing of the backdoor roth, but specifically what would I do with my prior Roth IRA account.  Any help is appreciated.

  • #2
    Keep it and congratulate yourself on funding it during residency.

    Backdoor Roth is for future contributions (once you are above income limit for direct Roth contributions).  The mechanics of that have been described multiple places on this website but basics are you open a Traditional IRA, fund it with $6000, then convert it to Roth.

    Good luck!

    Comment


    • #3
      nothing.

      Comment


      • #4
        Good work! As long as you are not planning to take distributions from your Roth in the next 5 years, just use it for step 2 of your upcoming backdoor Roth’s (the conversion).

        Welcome to the forum!
        Financial planning, investment management and CPA services for medical and high-income professionals | 270-247-6087

        Comment


        • #5
          Your Roth IRA is an INDIVIDUAL retirement account and therefore is attached to YOU, not your residency. So you just keep it around, make sure it’s allocated according to your plan, and start to utilize a Backdoor Roth by contributing non-deductible funds to a Traditional IRA and then converting it into your already-made Roth IRA. Read through wci’s instructions on how to do this.

          Good luck!

          Comment


          • #6
            Backdoor Roth is a strategy, not a type of account. Don't feel bad, a lot of folks get lost on this issue.

            Simply keep your current Roth IRA. Now that your income is higher, as an attending, it's unlikely that you qualify to make contributions directly to your Roth IRA. So, you need to open a Traditional IRA and make contributions for which you do not take a deduction - again because of your higher income. Once your non-deductible contribution hits your Traditional IRA, you simply request that your custodian do a Roth Conversion to move the money from your Traditional IRA to your Roth IRA. The only taxes you would owe, assuming you don't have any other pre-tax IRA monies in any other accounts, would be couple of pennies of interest you earned for the few days the money sat in your Traditional IRA.

            Comment


            • #7




              Hello, I graduated Residency June 2019, started my Attending position August 2019.  I have a Roth IRA which I started during Residency with approx $16,300 in value.   My question is what do I now do with this account (through fidelity).  I have been hearing of the backdoor roth, but specifically what would I do with my prior Roth IRA account.
              Click to expand...


              You keep it!  And you open a traditional IRA account at Fidelity, in order to make backdoor contributions to the Roth IRA you began in residency.  A backdoor Roth simply refers to the trick of making a nondeductible contribution to a traditional IRA, then performing a Roth conversion to move the money into your Roth IRA.  Since there's no income cap on Roth conversions, this is legal, and because your traditional IRA contribution was made with after-tax income, you don't owe any taxes on the conversion.

              Comment


              • #8
                Piggy backing on this OP q, don't we want both Traditional and BD Roth accounts in high earning years so to maximize tax diversification upon retirement?

                Comment


                • #9
                  That's what your 401k is for

                  Comment


                  • #10




                    Piggy backing on this OP q, don’t we want both Traditional and BD Roth accounts in high earning years so to maximize tax diversification upon retirement?
                    Click to expand...


                    Yes. Typically max out your pre-tax 401K and also your backdoor Roth. Roth conversions if you have a low-income year in the meantime (sabbatical?) and after retirement, as practical and as your plan shows the conversions will lower lifetime taxes + meet your estate plan goals for passing along assets to the next generation.

                    Iow, if you will outlive your assets (most doctors will, at least those who follow this forum), you should also consider tax diversification into the next generation.
                    Financial planning, investment management and CPA services for medical and high-income professionals | 270-247-6087

                    Comment


                    • #11


                      if you will outlive your assets (most doctors will, at least those who follow this forum),
                      Click to expand...


                      You have so much faith in us, yay!

                      Comment


                      • #12







                        if you will outlive your assets (most doctors will, at least those who follow this forum),
                        Click to expand…


                        You have so much faith in us, yay!
                        Click to expand...


                        Faith built on interacting with so many readers here. There is no way to calculate the impact the blog and forum have had on the finances of readers and participants.
                        Financial planning, investment management and CPA services for medical and high-income professionals | 270-247-6087

                        Comment

                        Working...
                        X