Announcement

Collapse
No announcement yet.

Possible to contribute to BOTH 403(b) and a backdoor IRA, without any tax penalty?

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • Possible to contribute to BOTH 403(b) and a backdoor IRA, without any tax penalty?

    Hello! My husband is in his first half-year as an attending, and I only have a small amount of self employment income for the year. We had been contributing to both of our Roth IRA's while he was in residency. We are both now in the process of switching from our Roth IRAs, to Traditional IRA's, and then back to Roth IRA's. This will recharacterize the IRAs to the backdoor method of contribution because of his salary increase. He also contributes to his employer's 403(b) plan, and will max it out before the year is over to get the full benefits.

    My question is: Is there any reason why we should NOT do a backdoor IRA for both of us, in addition to his 403(b)? Are there any extra taxes or penalties, or any good reason NOT to contribute to both?

    Thank you

  • #2
    ASSUMING YOU HAVE NO BALANCE IN PRE-TAX IRAs:
    No reason to bypass the backdoor Roth for both of you unless you have to borrow money to contribute. No extra taxes, no penalties, be sure to file your Forms 8606.
    Financial planning, investment management and CPA services for medical professionals | 270-247-6087

    Comment


    • #3
      Originally posted by tomeosara View Post
      My question is: Is there any reason why we should NOT do a backdoor IRA for both of us, in addition to his 403(b)? Are there any extra taxes or penalties, or any good reason NOT to contribute to both?
      no.

      Comment


      • #4
        Thank you for your reply. The money from the Roth IRA is already post-tax, so it will be moved to Traditional, and then back to Roth IRA. So essentially it'll be the same after-tax dollars being moved. Will not be borrowing money to contribute. Do you mean, we should make sure not to have any money left in the Traditional IRA at the end of the year?

        Thank you for mentioning Form 8606, the friendly folks at Vanguard said that too. I'll put in with my tax docs now so I don't forget!

        Comment


        • #5
          Originally posted by tomeosara View Post
          Thank you for your reply. The money from the Roth IRA is already post-tax, so it will be moved to Traditional, and then back to Roth IRA. So essentially it'll be the same after-tax dollars being moved. Will not be borrowing money to contribute. Do you mean, we should make sure not to have any money left in the Traditional IRA at the end of the year?

          Thank you for mentioning Form 8606, the friendly folks at Vanguard said that too. I'll put in with my tax docs now so I don't forget!
          No, I was talking about PRE-TAX IRAs only. A TIRA can be pre- or post-tax. A pre-tax w/b if you had r/o a 401k from an old job to an IRA.
          Financial planning, investment management and CPA services for medical professionals | 270-247-6087

          Comment


          • #6
            Thank you for clearing that up. No, didn't do any rollovers into the IRA.

            Comment

            Working...
            X