onida2000ParticipantStatus: PhysicianPosts: 1Joined: 04/11/2019
Hoping you guys can guide me. I have 220K in traditional IRA. My wife will be finishing up her fellowship in July 2020. I’m 40 y/o and I’ve been practice for last 10 years and our AGI is around 500K.
As you can imaging, once my wife will earn her full physician salary, we will have lots of tax to pay. I have been contributing and taking back door IRA advantage for my wife IRA. Not for me d/t Prorata rule and my idea was to covert my IRA traditional to Roth and start using advantage of backdoor IRA. also avoiding high taxes in the retirement.
I have about, all tax deferred
500k in ORP
220k in IRA
170k in 457b
my questions are
1) Traditional to Roth conversion, My marginal tax bracket for conversion will be 35%. Is it worth it and if yes how do I need to do that? Should I let it grow in tradition IRA pocket.
2) Other alternative, Should I keep my traditional IRA or direct roll over to 403b, to consolidate in one account. And then take advantage of Backdoor Roth from tradition IRA.
thanks in advanceMay 9, 2019 at 4:37 pm MST #213545DreamgiverParticipantStatus: PhysicianPosts: 733Joined: 03/09/2017
If your 403b accepts and IRA rollover I vote for option #2 considering your tax bracket. You could run the numbers on an Excel spreadsheet but I think #2 is going to be the winner.May 9, 2019 at 4:40 pm MST #213550jacoavluModeratorStatus: Physician, Small Business OwnerPosts: 1848Joined: 03/01/2018My marginal tax bracket for conversion will be 35%. Is it worth itClick to expand…
noShould I keep my traditional IRA or direct roll over to 403b, to consolidate in one account. And then take advantage of Backdoor Roth from tradition IRA.Click to expand…
rollover pretax IRA if 403b will accept, and investment options/fees within 403b are ok, then backdoor Roth
The Finance Buff's solo 401k contribution spreadsheet: https://goo.gl/6cZKVAPedsParticipantStatus: PhysicianPosts: 3614Joined: 01/08/2016May 9, 2019 at 5:16 pm MST #213555Financial Naive MDParticipantStatus: PhysicianPosts: 29Joined: 05/05/2019
1) Traditional to Roth conversion, My marginal tax bracket for conversion will be 35%. Is it worth it and if yes how do I need to do that? Should I let it grow in tradition IRA pocket.Click to expand…
Absolutely not, you can’t pay for more than 35% even you earn a lot more. If you were in 15% tax bracket, conversion may make sense.May 9, 2019 at 5:39 pm MST #213559jfoxcpacfpModeratorStatus: Financial Advisor, Accountant, Small Business OwnerPosts: 7326Joined: 01/09/2016
I vote no (#2) in this situation. Now, if we were in a bear, my vote would be yes (#1). But not at AGI $500k and a happy market.
Hey, welcome to the forum!
Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~ 270-247-0555
https://fox-cpas.com/for-doctors-only/May 9, 2019 at 6:00 pm MST #213565LordosisParticipantStatus: PhysicianPosts: 793Joined: 02/11/2019
I vote for #2. That Roth is too expensive for you are that income.
You forgot option 3. Cash it out and triple it at Turningstone.
“Never let your sense of morals prevent you from doing what is right.”May 10, 2019 at 3:11 pm MST #213728DMFAModeratorStatus: PhysicianPosts: 2126Joined: 06/24/2016
Roth conversions at high brackets are p much never a good decision.
Rollover to a qualified plan. If you can’t or don’t want to do that, such as if you have a garbage 401(k) with poor choices/fees and no better options, then meh, just don’t do backdoor Roth. It’s great, I love it, but it’s not the be-all end-all.
"I like money." - Frito Pendejo (Idiocracy)
[Not a financial professional (yet), lawyer, or employee of The White Coat Investor]May 10, 2019 at 4:55 pm MST #213742