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Starting backdoor roth

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  • Avatar Otouser 
    Participant
    Status: Resident
    Posts: 2
    Joined: 04/15/2019

    I am currently in residency about to transition to fellowship. My wife is completing fellowship and will be starting her first attending job. Up until this point, we have both made maximum contributions to our Roth IRAs. This next year, we will no longer be eligible to contribute directly to our Roth IRAs. I have two questions regarding starting to do a backdoor roth. 1) My wife has approximately $7000 in a rollover IRA from an old 401k. Does this need to be re-characterized to a roth IRA first? 2) I accidentally contributed $1000 to my Roth IRA this year already (not realizing our MAGI would be above the limit). Does this also need to be re-characterized to a tIRA first, and then put back in the Roth via the backdoor? Thanks for your input!

    #206470 Reply
    ENT Doc ENT Doc 
    Participant
    Status: Physician
    Posts: 3353
    Joined: 01/14/2017

    1. I think you mean “converted”. No, it doesn’t need to be done first, but if she has a remaining balance in the rollover IRA as of 12/31 she’ll owe tax on any Roth conversion from a backdoor method. Why not roll it over into a current 401k plan? I’d look to this first. If not possible then just convert everything after she does her non-deductible IRA contribution. One time tax hit for the benefit of having non-taxable backdoor Roths moving forward and to get more money into the Roth space.

    2. Yes, you will have to recharacterize as you suggested and then convert.

    #206499 Reply
    Liked by DMFA, Peds, Lordosis
    Avatar Otouser 
    Participant
    Status: Resident
    Posts: 2
    Joined: 04/15/2019

    Thank you!

    #206627 Reply

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