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what to do with minuscule $ in old IRA

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  • Avatar ifonlyFI 
    Participant
    Status: Physician
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    Joined: 08/23/2017

    I found an 2007 old traditional IRA from TD Ameritrade with $55.  I want to do backdoor roth later this year, likely through Fidelity where some of my retirement $ is in.  What do I do with that $55?  Cash it out and go buy smoothies for the kids or transfer it over somehow to fidelity?

     

    I realize that such little money makes little difference, but I want to understand the process.

     

    #219367 Reply
    Avatar jacoavlu 
    Moderator
    Status: Physician, Small Business Owner
    Posts: 2377
    Joined: 03/01/2018

    short answer, convert it to Roth

    if you’re doing backdoor Roth at Fidelity, transfer the TDA traditional IRA to Fidelity traditional IRA. You can do this by calling Fidelity and telling them you want to do this.

    Then later in the year, you make your 2019 contribution to your Fidelity traditional IRA. Then convert the entire balance to Roth. You’ll pay tax on the amount converted that was pretax, $55 in this case if there was $0 market gain or loss until that time.

    The Finance Buff's solo 401k contribution spreadsheet: https://goo.gl/6cZKVA

    #219368 Reply
    Andrew Musbach Andrew Musbach 
    Participant
    Status: Financial Advisor, Small Business Owner
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    Joined: 10/19/2017

    I would transfer the $55 to your Fidelity IRA first. When you do step 1 and put $6k into your Traditonal IRA as a non-deductible contribution, you’ll have $6,055 in your Fidelity Traditional IRA. Then, as @jacoavlu mentions, once you convert the $6,055 to your Fidelity Roth IRA, $55 of that will be taxable.

    Andrew Musbach, CFP® | [email protected]
    MD Wealth Management, LLC | http://www.mdwmllc.com

    #219373 Reply
    Avatar Peds 
    Moderator
    Status: Physician
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    Joined: 01/08/2016
    What do I do with that $55?

    Click to expand…

    you just convert it and pay tax.

    Cash it out and go buy smoothies for the kids

    Click to expand…

    no then youll owe tax and penalty

    transfer it over somehow to fidelity?

    Click to expand…

    where are you doing your bdr?

    #219374 Reply
    Avatar G 
    Participant
    Status: Physician, Small Business Owner
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    Joined: 01/08/2016

    awesome to find $55!  (but how do you have an IRA with only $55???)

    if you have a 401k, see if you can rollover an IRA to it (with fidelity and if your plan allows it, it is very easy to roll it over into that 401k).

    otherwise I would do what jacoavlu suggests, convert it to a Roth and pay the $19 in tax.

    #219375 Reply
    Avatar nephron 
    Participant
    Status: Physician
    Posts: 227
    Joined: 05/09/2019

    I would cash it out and pay the taxes and penalties.  It’s a pain to transfer IRAs between a lot of companies, I think that you usually have to get a notarized signature from your spouse if you are married. The other option would be to see if you can convert it to a roth at TD ameritrade.

    #219386 Reply
    Liked by Craigy
    Avatar ifonlyFI 
    Participant
    Status: Physician
    Posts: 100
    Joined: 08/23/2017

    awesome to find $55!  (but how do you have an IRA with only $55???)

    Click to expand…

    between fellowship and attending job, I transferred the td ameritrade to my group’s 401k.  I guess I left a little $ by accident.

    I also found $28k from an old 401k from residence.  Things were all paper files back then.  And obviously, I was clueless about anything financial.  $28,000 was a better surprise than $55.

     

    I’ll talk to fidelity to figure out transfer processess.  If it is too much of PIA, I’ll settle for the smoothie

     

    thanks all!

    #219395 Reply
    Liked by G
    Avatar Tim 
    Participant
    Status: Accountant
    Posts: 3059
    Joined: 09/18/2018
    I’ll talk to fidelity to figure out transfer processess. If it is too much of PIA, I’ll settle for the smoothie

    Click to expand…

    Talk to Fidelity and let Them figure it out.

    #219503 Reply
    Avatar jacoavlu 
    Moderator
    Status: Physician, Small Business Owner
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    Joined: 03/01/2018

    A super lazy person would do nothing. Leave it as is. It’s just a few numbers on an 8606. You’ll pay a few dollars in pro rata tax each year with your backdoor Roth and be left with a few dollars basis.

    The Finance Buff's solo 401k contribution spreadsheet: https://goo.gl/6cZKVA

    #219504 Reply
    Liked by Peds
    Avatar Peds 
    Moderator
    Status: Physician
    Posts: 4434
    Joined: 01/08/2016

    A super lazy person would not be doing pro-rata math

    #219505 Reply
    Liked by Craigy
    Avatar FIREshrink 
    Participant
    Status: Physician
    Posts: 1005
    Joined: 01/11/2017

    If you transfer it you may pay a $50+ fee.

    #219515 Reply
    Liked by Craigy
    Hank Hank 
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    Status: Attorney
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    Joined: 03/27/2017
    I also found $28k from an old 401k from residence.  Things were all paper files back then.  And obviously, I was clueless about anything financial.  $28,000 was a better surprise than $55.

    Click to expand…

    Quick, go check between the sofa cushions!  You seem to be on a roll; you’ll probably find more than enough cash in the sofa to buy smoothies for a month.

    #220029 Reply
    Liked by Tim
    Craigy Craigy 
    Participant
    Status: Spouse
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    Joined: 09/16/2016

    +1 on converting to roth.

    You could cash it out too.  You’ll get your whole $55.00 out.  But you might owe like $25.00 on your return this year.  Hope you’re prepared for that. 😆

    Either way I’d get rid of it, so that in future years you can have an easier time with your backdoor roths.

    LEVEL 1 WCI FORUM MEMBER.

    #220679 Reply

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