Backdoor Roth and SEP IRA conflict

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  • Avatar AbCos18 
    Status: Physician
    Posts: 1
    Joined: 02/07/2019
    Earnest refinancing bonus

    I had a SEP IRA on Dec 31st, 2018, and I am wanting to make backdoor Roth contributions for 2018 and 2019.
    I am in the process of converting the SEP to a Solo 401k in order to facilitate the 2019 contribution.

    I have been told that for tax year 2018 I can still contribute the $5500 to a traditional IRA (before April), and then do the Roth conversion at a later point in time without being subject to the pro rata calculation since the conversion would happen in 2019 and not 2018.

    Is this true? Would I then be able to convert the 2018 and 2019 contributions at the same time?

    #189000 Reply
    Faithful Steward Faithful Steward 
    Status: Financial Advisor, Small Business Owner
    Posts: 439
    Joined: 06/12/2017

    Yes, if you get the SEP IRA rolled into your Solo 401(k) prior to the date you do the conversion, you’re good to go.

    Yes, you can convert the 2018 and 2019 contributions at the same time.

    Have you made sure that your Solo 401(k) custodian will permit the rollover of a SEP IRA? Not all custodians will accept SEP IRA funds.

    Michael Peterson, CFP® | Faithful Steward Wealth Advisors | (717) 496-0900

    #189017 Reply
    Liked by Peds, spiritrider
    Avatar Peds 
    Status: Physician
    Posts: 3999
    Joined: 01/08/2016

    As long as you make the rollover this year, you can do a backdoor rIRA before April for last year.

    #189058 Reply

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