heartdoc23ParticipantStatus: ResidentPosts: 1Joined: 07/19/2019
Hello, please help me fix this series of events without losing too much money and breaking any laws:
2015: Spouse contributed $5400 after tax money to a Roth IRA, but we were over the income limit (he had been automatically investing in a Roth IRA as a resident, and forgot to change it once he became an attending).
2016: He realized his error and recharacterized $5700 as a traditional IRA. Planned to do backdoor but was afraid it was illegal. Yup.
Now it’s 2019, and there is about $7600 in the Vanguard account. He also has a Roth IRA with Vanguard. No other IRAs, but has a 401K and TSP.
Here’s what I’ve gathered so far are my options:
1) Do backdoor roth with $6000 now, then do a roth conversion with the remaining $1600 (and owe taxes)
2) Do backdoor roth with $6000 now, then roll over the remaining $1600 to his 401K at a different investment firm
Any help would be greatly appreciated!!!July 19, 2019 at 8:15 pm MST #231978ENT DocParticipantStatus: PhysicianPosts: 3502Joined: 01/14/2017
Roll $2,200 into the TSP and convert the $5400 of basis from the prior year’s contribution to a Roth. Then, contribute $6k to the TIRA after tax and do a backdoor Roth with this. You should be able to get $11,400 into the Roth and be free of any tax burden, provided you can roll the growth into the TSP.July 19, 2019 at 8:25 pm MST #232027Faithful StewardParticipantStatus: Financial Advisor, Small Business OwnerPosts: 511Joined: 06/12/2017
The way you described it, you could convert the entire $7,600. There will be taxes due on the $2,300 of growth.
Youcould also make your 2019 Backdoor Rothcontributionand convert the entire $13,600.
Michael Peterson, CFP® | Faithful Steward Wealth Advisors
https://ProsperousPhysician.com | (717) 496-0900July 20, 2019 at 9:30 am MST #232119