roll-over to solo 401K and backdoor Roth question

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roll-over to solo 401K and backdoor Roth question

Postby liuruyu » Tue Jan 29, 2013 9:56 am

So, We are going to roll over my husband's roll-over IRA into a solo 401K this year, and that opens the Roth IRA backdoor for us. Before I kick start the process, my questions are:

1. A solo 401K plan is only valid if it is set up by the end of the year. So if we roll-over husband's roll-over IRA into it now, it will be considered to be opened in 2013, NOT 2012. Does that still allow us to do back door Roth for husband for 2012? As it is to my understanding that the back door Roth strategy is still valid up till April 15 for 2012.

2. If we contribute to husband's TIRA now for 2012, do we still get a 1099R from Vanguard for our 2012 tax filing? And would we be gettiing another 1099R from Fidelity for rolling the TIRA into the Solo 401K? Husband just rolled all his previous 401K/IRA into the Vanguard Roll-over IRA April 2012. So we have 1099Rs from those.

3. In the Turbotax online version, it will ask me about the end of year IRA balance. Now, in our case, it will be complicated, as the end of the year IRA balance is not zero (it was the balance of the roll-over IRA). Would that threw the tax part off?


Thx for your help!!!
liuruyu
 
Posts: 18
Joined: Thu Jul 26, 2012 1:20 pm

Re: roll-over to solo 401K and backdoor Roth question

Postby liuruyu » Tue Jan 29, 2013 10:46 am

so I spoke with Vanguard rep. Here is what she adviced me (sounds reasonable to me at least)

A back converstion can only be done/accounted for for the calendar year. So I can make a contribution to my husband's TIRA now and consider it a 2012 contribution, but my conversion will be counted as 2013 conversion. Which means I won't get a 1099R for my 2012 tax return, but one for 2013 tax return. I will file the 5K contribution in my 2012 return (in the deduction and credit part, which we won't get credit anyway, so doesn't matter), but no corresponding 1099R in the income part. I will be reporting both 2012 and 2013 rollover (assume no value change, so the total of 5000 from 2012 and 5500 from 2013 to Roth) in my 2013 income part with the 1099R, but only another 5500 in the TIRA contribution for my husband on the 2013 form.

With that logic, we won't be getting a roll-over 1099R from solo 401K rollover into Fidelity.
liuruyu
 
Posts: 18
Joined: Thu Jul 26, 2012 1:20 pm


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