Folks, need some help here
I currently have 200K in a traditional IRA (funded with pre tax $) in Vanguard, and currently cannot contribute to a Roth IRA due to income limits. The 200K in the traditional IRA also prevents me from doing a backdoor Roth contribution.
I have a 401k with a my current employer and could roll over the Vanguard IRA to the 401k, and thus contribute to a Roth IRA via the backdoor Traditional-Roth conversion.
The expense ratio in Vanguard for my IRA (total bond market index) is 0.1%, the equivalent expense ratio in my 401k is 0.43%. So, it will cost me an additional $660/yr in fees to move my IRA out of Vanguard. (For asset allocation reasons, the IRA has to be 100% bonds)
My paper napkin math (assuming 25+ years to retirement, 15% long term capital gains tax, 4% long term return on bonds) indicates that $5k in a Roth today, would be worth ~15K in 25 years. The tax savings of a Roth (compared to investing the same 5K in a taxable account) is ~$1500.
So, it would seem that I would take a $660/yr hit on expenses, but it would be worth $1500/yr to me to perform the roll over from my IRA to my 401k.
The proposition becomes more attractive if taxes rise in the future, less attractive if bonds perform worse than average in the future.
Am I doing the math right?