Search found 1353 matches

by airahcaz
Thu Jan 12, 2017 7:08 pm
Forum: Personal Finance (Not Investing)
Topic: The Mega Backdoor Roth IRA
Replies: 401
Views: 120918

Re: The Mega Backdoor Roth IRA

If one is contributing pre-tax to the $18K limit, does this necessarily have to be met before the after-tax contributions can commence? No. You may contribute both types simultaneously. Thank you for both replied. Any disadvantage in doing it simultaneously other than having barely any paycheck left?
by airahcaz
Thu Jan 12, 2017 6:52 pm
Forum: Personal Finance (Not Investing)
Topic: Clarification needed on Mega backdoor Roth
Replies: 17
Views: 2374

Re: Clarification needed on Mega backdoor Roth

This thread has helped me much. I got worried with the 2014 IRS guidance as almost all 401K plans do not allow in service withdrawals of pre-tax dollars. Further, most plans definitely hold the pre-tax separate from after-tax and allow solely the in-service withdrawals of after-tax dollars to Roth. ...
by airahcaz
Thu Jan 12, 2017 6:21 pm
Forum: Personal Finance (Not Investing)
Topic: The Mega Backdoor Roth IRA
Replies: 401
Views: 120918

Re: The Mega Backdoor Roth IRA

Has something changed in the past couple years? Just read a post that referenced this from the IRS website: "Can I roll over just the after-tax amounts in my retirement plan to a Roth IRA and leave the remainder in the plan? No, you can’t take a distribution of only the after-tax amounts and le...
by airahcaz
Thu Jan 12, 2017 6:05 pm
Forum: Personal Finance (Not Investing)
Topic: The Mega Backdoor Roth IRA
Replies: 401
Views: 120918

Re: The Mega Backdoor Roth IRA

If one is contributing pre-tax to the $18K limit, does this necessarily have to be met before the after-tax contributions can commence?
by airahcaz
Thu Jan 12, 2017 11:10 am
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth IRA Recharacterization
Replies: 26
Views: 1048

Re: Backdoor Roth IRA Recharacterization

It is entirely possible I'm using the wrong word. Not sure why "one definitely doesn't want to do that" cause it seems to me that is exactly what you want to do - make it as if it never happened. However, if you feel the "excess contribution" approach is right, that is what you ...
by airahcaz
Thu Jan 12, 2017 10:33 am
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth IRA Recharacterization
Replies: 26
Views: 1048

Re: Backdoor Roth IRA Recharacterization

I know from an earlier post that that is what they told you. I'm just not sure it is correct. I did a search on "excess contribution" and all the answers had something to do with being ineligible. You were certainly eligible to make the contribution so I'm wondering if they have misunders...
by airahcaz
Thu Jan 12, 2017 9:25 am
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth IRA Recharacterization
Replies: 26
Views: 1048

Re: Backdoor Roth IRA Recharacterization

After rechsracterizetion, the process is an Excess Contribution which returns the original $5500 + any gains or losses, and that is what it is called at Fidelity. It is not a withdrawal.
by airahcaz
Mon Jan 09, 2017 7:13 pm
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth IRA Recharacterization
Replies: 26
Views: 1048

Re: Backdoor Roth IRA Recharacterization

If you cannot deduct the TIRA contribution, you will have 8606 basis to track, but it's not that hard. Nonetheless, if that gets to be too much of a hassle for you as you get older you can always stop filing the 8606 and pay tax on 100% of your distributions. Another reason to retain the conversion...
by airahcaz
Sat Jan 07, 2017 7:34 pm
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth IRA Recharacterization
Replies: 26
Views: 1048

Re: Backdoor Roth IRA Recharacterization

Yes, or around 91% if you did not include the 5500 distribution in the 55,500 value. Of course, this calculation does not produce the tax, only the taxable income on which to figure the tax. Right, so my basic comparison is $1100 vs. $4950 in taxable income, is this the right comparison? Yes, if yo...
by airahcaz
Sat Jan 07, 2017 7:59 am
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth through Rollover IRA
Replies: 32
Views: 1003

Re: Backdoor Roth through Rollover IRA

... cause this still won't work if I rolled it over to a tIRA, it has to be an employer plan, correct? Correct. Paraphrasing what retiredjg said, can you confirm this is what happened: In 2016, you made a non-deductible contribution to the Rollover IRA instead of your regular IRA. The Rollover IRA ...
by airahcaz
Fri Jan 06, 2017 11:18 pm
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth IRA Recharacterization
Replies: 26
Views: 1048

Re: Backdoor Roth IRA Recharacterization

Alan S. wrote:Yes, or around 91% if you did not include the 5500 distribution in the 55,500 value. Of course, this calculation does not produce the tax, only the taxable income on which to figure the tax.



Right, so my basic comparison is $1100 vs. $4950 in taxable income, is this the right comparison?
by airahcaz
Fri Jan 06, 2017 9:40 pm
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth IRA Recharacterization
Replies: 26
Views: 1048

Re: Backdoor Roth IRA Recharacterization

Right, if you did not convert into a new Roth account, the earnings calculation must be based on the overall gain or loss of the Roth that did receive your conversion. Therefore, you have 1100 of tax free earnings to be recharacterized and then withdrawn, still quite impressive but not as good as 1...
by airahcaz
Fri Jan 06, 2017 8:27 pm
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth IRA Recharacterization
Replies: 26
Views: 1048

Re: Backdoor Roth IRA Recharacterization

If you converted 5500 in 2016 and you indicate that this has about doubled since then, you probably should not recharacterize. Even if the 5500 conversion ends up mostly taxable, the effective tax rate you are paying on the doubled conversion assets is HALF your marginal rate even though the actual...
by airahcaz
Fri Jan 06, 2017 5:52 pm
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth through Rollover IRA
Replies: 32
Views: 1003

Re: Backdoor Roth through Rollover IRA

This is how it looks to me. 1) The deadline to recharacterize your 2015 Roth conversion has passed (October 2016). Since you did not pro-rate your 2015 conversion with the Rollover IRA, your 2015 taxes are incorrect and need to be amended. Depending on the relative size of your Rollover iRA compare...
by airahcaz
Fri Jan 06, 2017 4:56 pm
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth through Rollover IRA
Replies: 32
Views: 1003

Re: Backdoor Roth through Rollover IRA

I guess I should have asked….How much is in the Rollover IRA? <$60K How much are your non-deductible contributions? Confused here, cause you mean the non deductible contributions that would have gone into the separate tIRA and then into the Roth? And your tax bracket? Need to look this up Since you...
by airahcaz
Fri Jan 06, 2017 4:15 pm
Forum: Investing - Theory, News & General
Topic: Liquidate retirement account with significant loss
Replies: 8
Views: 1079

Re: Liquidate retirement account with significant loss

One can claim a significant loss in an IRA (or even a 529 plan) under some circumstances. The loss would go on Schedule A as a Misc. deduction subject to the 2% of AGI floor which is a difficult criteria. http://www.fairmark.com/rothira/losses.htm We claimed losses in 529 plans with this itemized d...
by airahcaz
Fri Jan 06, 2017 4:13 pm
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth IRA Recharacterization
Replies: 26
Views: 1048

Re: Backdoor Roth IRA Recharacterization

There are two parallel threads going. Please pick one. Fidelity was wrong or there is a misunderstanding. If the rollover IRA existed on 12/31/2015 and you did a back door in 2015, your 2015 taxes are wrong because you did not prorate the conversion. Sorry, let us continue on the other. To answer E...
by airahcaz
Fri Jan 06, 2017 4:08 pm
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth through Rollover IRA
Replies: 32
Views: 1003

Re: Backdoor Roth through Rollover IRA

It would be helpful to have some actual numbers. How much $ is in your tIRA? How much of that comes from non-deductible contributions? I'm assuming $5,500 from 2015 and $5500 from 2016. What is your tax bracket? Sorry, hope I answered this in my recent reply, but there is always 0 in the tIRA, afte...
by airahcaz
Fri Jan 06, 2017 4:03 pm
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth through Rollover IRA
Replies: 32
Views: 1003

Re: Backdoor Roth through Rollover IRA

1. Leave the conversion as it is. 2. Calculate your total non-deductible contributions for all past years. This should be reported on line 14 of Form 8606 each year as your non-deductible contributions accumulate each year. This shows 0 for me, as I only had 401K, empty tIRA solely used for Backdoo...
by airahcaz
Fri Jan 06, 2017 2:12 pm
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth through Rollover IRA
Replies: 32
Views: 1003

Re: Backdoor Roth through Rollover IRA

Ok, I can kick off the undo, the reporting of these 4 transactions is required, correct? Even though it "undos", tax documents are triggered and so each need to be reported vs. the alternative which is like it never happened? I worry that this complexity will raise a red flag and if I'm b...
by airahcaz
Fri Jan 06, 2017 2:09 pm
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth through Rollover IRA
Replies: 32
Views: 1003

Re: Backdoor Roth through Rollover IRA

Ok, I can kick off the undo, the reporting of these 4 transactions is required, correct? Even though it "undos", tax documents are triggered and so each need to be reported vs. the alternative which is like it never happened? I worry that this complexity will raise a red flag and if I'm b...
by airahcaz
Fri Jan 06, 2017 1:35 pm
Forum: Investing - Theory, News & General
Topic: Liquidate retirement account with significant loss
Replies: 8
Views: 1079

Re: Liquidate retirement account with significant loss

The only time it could make sense is if the value of the account was below the basis. The basis is the total of non-deductible contributions. Generally you should not have that many non-deductible contributions to begin with. Using even numbers for example sake, say one contributed pretax $10K annu...
by airahcaz
Fri Jan 06, 2017 1:13 pm
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth through Rollover IRA
Replies: 32
Views: 1003

Re: Backdoor Roth through Rollover IRA

Oh boy, I think I'm in a bit of a pickle now, I did a Backdoor Roth IRA conversion of the $5500 in 2016, when I had a Rollover IRA already. You can still recharacterize a 2016 Roth conversion, and effectively "undo" it. Or you can simply pay income taxes on (most of) the $5500 conversion ...
by airahcaz
Fri Jan 06, 2017 12:55 pm
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth through Rollover IRA
Replies: 32
Views: 1003

Re: Backdoor Roth through Rollover IRA

Oh boy, I think I'm in a bit of a pickle now, I did a Backdoor Roth IRA conversion of the $5500 in 2016, when I had a Rollover IRA already. You can still recharacterize a 2016 Roth conversion, and effectively "undo" it. Or you can simply pay income taxes on (most of) the $5500 conversion ...
by airahcaz
Fri Jan 06, 2017 12:07 pm
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth IRA Recharacterization
Replies: 26
Views: 1048

Re: Backdoor Roth IRA Recharacterization

my quoting is not great: One of the first things you should do is find out (or tell us if you already know) if you could (and would) roll the pretax money back to a 401(k) or similar employer plan. This would make cleanup easier and more profitable Fidelity will only allow me to roll it back to my t...
by airahcaz
Fri Jan 06, 2017 12:02 pm
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth IRA Recharacterization
Replies: 26
Views: 1048

Re: Backdoor Roth IRA Recharacterization

Hi - think I made a mistake and need some help please. For years, have had a separate (pass-through) Traditional IRA for the sole purpose of utilizing the Backdoor Roth IRA, and thus is kept at $0 before and after the conversion annually, never having a taxable event, cause I didn't have any other ...
by airahcaz
Fri Jan 06, 2017 11:32 am
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth IRA Recharacterization
Replies: 26
Views: 1048

Re: Backdoor Roth IRA Recharacterization

... being ineligible to make a traditional IRA contribution from the start, so the $5500 cannot remain there... Anyone with income who is less than 70.5 years old can contribute to tIRA. What you cannot do if you make too much money is deduct that contribution from your taxable income. You can actu...
by airahcaz
Fri Jan 06, 2017 11:29 am
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth through Rollover IRA
Replies: 32
Views: 1003

Re: Backdoor Roth through Rollover IRA

I think you can re-characterize it. I would not re-characterize back to tIRA because that will leave $5,500 basis in your IRA and that is something you would have to deal with eventually. I would undo the contribution all together - as if you never did the conversion to Roth or the original contrib...
by airahcaz
Fri Jan 06, 2017 11:01 am
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth through Rollover IRA
Replies: 32
Views: 1003

Re: Backdoor Roth through Rollover IRA

I think you can re-characterize it. I would not re-characterize back to tIRA because that will leave $5,500 basis in your IRA and that is something you would have to deal with eventually. I would undo the contribution all together - as if you never did the conversion to Roth or the original contrib...
by airahcaz
Fri Jan 06, 2017 10:53 am
Forum: Investing - Help with Personal Investments
Topic: (Backdoor) Roth conversion/recharacterization, separate Roth acount
Replies: 7
Views: 658

Re: (Backdoor) Roth conversion/recharacterization, separate Roth acount

Another possible benefit is withdrawing the original contribution reduced by negative earnings and re contributing the full amount. If you have converted, you first need to recharacterize the conversion back to the TIRA, then request a return of the original contribution now reduced by investment l...
by airahcaz
Fri Jan 06, 2017 10:46 am
Forum: Investing - Theory, News & General
Topic: Liquidate retirement account with significant loss
Replies: 8
Views: 1079

Liquidate retirement account with significant loss

Starting a new thread based on something I read in a post here.

Say a Traditional IRA suffered a devastating loss, say 50% or more, would it be worth liquidating from a tax perspective? Namely, one should owe taxes on contributions but is this offset by the significant losses?
by airahcaz
Fri Jan 06, 2017 10:03 am
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth IRA Recharacterization
Replies: 26
Views: 1048

Backdoor Roth IRA Recharacterization

Hi - think I made a mistake and need some help please. For years, have had a separate (pass-through) Traditional IRA for the sole purpose of utilizing the Backdoor Roth IRA, and thus is kept at $0 before and after the conversion annually, never having a taxable event, cause I didn't have any other T...
by airahcaz
Fri Jan 06, 2017 9:53 am
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth through Rollover IRA
Replies: 32
Views: 1003

Re: Backdoor Roth through Rollover IRA

Oh boy, I think I'm in a bit of a pickle now, I did a Backdoor Roth IRA conversion of the $5500 in 2016, when I had a Rollover IRA already. You need to amend your 1040 and pay the extra tax. Per discussion below you will also need to either fill out an 8606 for the first time or fix the one you fil...
by airahcaz
Fri Jan 06, 2017 9:25 am
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth through Rollover IRA
Replies: 32
Views: 1003

Re: Backdoor Roth through Rollover IRA

Oh boy, I think I'm in a bit of a pickle now, I did a Backdoor Roth IRA conversion of the $5500 in 2016, when I had a Rollover IRA already.
by airahcaz
Fri Jan 06, 2017 9:21 am
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth through Rollover IRA
Replies: 32
Views: 1003

Re: Backdoor Roth through Rollover IRA

If you have a rollover IRA, you should not use the back door at all. Whatever is in tIRA, Rollover IRA, SEP IRA or SIMPLE IRA in your name at the end of the year will be pro-rated with the Roth conversion step of your back door procedure. You don't want that. You could see if you can roll your roll...
by airahcaz
Fri Jan 06, 2017 8:41 am
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth through Rollover IRA
Replies: 32
Views: 1003

Re: Backdoor Roth through Rollover IRA

If you have a rollover IRA, you should not use the back door at all. Whatever is in tIRA, Rollover IRA, SEP IRA or SIMPLE IRA in your name at the end of the year will be pro-rated with the Roth conversion step of your back door procedure. You don't want that. You could see if you can roll your roll...
by airahcaz
Fri Jan 06, 2017 8:08 am
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth through Rollover IRA
Replies: 32
Views: 1003

Backdoor Roth through Rollover IRA

Hi - in order to execute the Backdoor Roth IRA, I'd contribute to an empty Traditional IRA ($5500), and then execute the conversion to an existing Roth IRA. The Traditional IRA goes back to $0 and remains empty for a year. I may have to close the Traditional IRA however, per my compliance department...
by airahcaz
Tue Nov 29, 2016 10:30 am
Forum: Investing - Theory, News & General
Topic: Oil ETF?
Replies: 14
Views: 1843

Re: Oil ETF?

UWTI and DWTI. Triple leverage. Long and short. Go big or go home. Actually, don't invest in Oil ETFs at all. They're really a poor investment. I prefer to gamble at the casino. They serve you drinks and comp your room after you lose everything. Fun flashing lights too. That being said, losing mone...
by airahcaz
Mon Nov 28, 2016 9:49 am
Forum: Personal Finance (Not Investing)
Topic: Bank for tenant security deposit
Replies: 12
Views: 1211

Re: Bank for tenant security deposit

You guys hear of this W9 and corresponding Landlord/Tenant account? Requires tenant's SS and Addess ind copy of Driver's License
by airahcaz
Mon Nov 28, 2016 9:31 am
Forum: Personal Finance (Not Investing)
Topic: Bank for tenant security deposit
Replies: 12
Views: 1211

Re: Bank for tenant security deposit

When we had rental property it was required by law to put the security deposit in an escrow account. Check on your state. This ^ And there may or may not be a requirement to keep it in a *separate* interest-bearing account. Even if it's not required to be kept separate, IF an "interest-bearing...
by airahcaz
Sun Nov 27, 2016 10:49 pm
Forum: Investing - Help with Personal Investments
Topic: Rent paid up front
Replies: 10
Views: 1213

Re: Rent paid up front

https://www.irs.gov/taxtopics/tc414.html Rental Income Most individuals operate on a cash basis, which means they count their rental income as income when it is actually or constructively received, and deduct their expenses when they are paid. Rental income includes: Advance rent – Generally, you i...
by airahcaz
Sun Nov 27, 2016 10:36 pm
Forum: Investing - Help with Personal Investments
Topic: Rent paid up front
Replies: 10
Views: 1213

Re: Rent paid up front

I suppose even if rent is taken up front in Dec 2016, one can apply Dec rent to 2016 and the remainder for 2017 for tax return purposes, legitimately and justifiably...
by airahcaz
Sun Nov 27, 2016 5:59 pm
Forum: Personal Finance (Not Investing)
Topic: Bank for tenant security deposit
Replies: 12
Views: 1211

Bank for tenant security deposit

Savings account interest rates are so low, but do folks still put tenant's security deposit in a separate savings account to officially pass on the few dollars of interest, OR a checking account with the rent checks for ease on managing everything in one account related to the tenant? Secondly, any ...
by airahcaz
Sun Nov 27, 2016 2:14 pm
Forum: Investing - Help with Personal Investments
Topic: Rent paid up front
Replies: 10
Views: 1213

Re: Rent paid up front

orca91 wrote:Is the landlord taking one check for all this and depositing it Dec. 1, or taking 12 checks to be deposited on at a time on the first of each month?


One check / wire on Dec 1, although landlord can wait till Jan 1 2017 if that helps?
by airahcaz
Sun Nov 27, 2016 2:04 pm
Forum: Investing - Help with Personal Investments
Topic: Rent paid up front
Replies: 10
Views: 1213

Re: Rent paid up front

pshonore wrote:I think it would depend on whether the landlord is on a cash basis or accrual basis for paying taxes.


What does that mean?
by airahcaz
Sun Nov 27, 2016 1:43 pm
Forum: Investing - Help with Personal Investments
Topic: Rent paid up front
Replies: 10
Views: 1213

Rent paid up front

If 12 months rent is paid up front in 2016 for a Dec 2016 to 2017 term, how is that filed for tax purposes on the Landlord's return? Is all income supposed to be realized in 2016, which inflates 2016 income tremendously?

TIA
by airahcaz
Fri Nov 18, 2016 11:51 am
Forum: Forum Issues and Administration
Topic: The Forum is now "Feed friendly"
Replies: 46
Views: 4581

Re: The Forum is now "Feed friendly"

But here's what I can tell you. All along I've wanted a feed that returns the first post of each new topic - one time, and never again. Now that it's been added, it works great. I haven't counted but I would estimate it returns 60-80 results per day - which for me is enough to scan and engage with ...
by airahcaz
Tue Nov 15, 2016 10:58 am
Forum: Investing - Help with Personal Investments
Topic: $53K limit for Defined Contribution Plans
Replies: 5
Views: 664

Re: $53K limit for Defined Contribution Plans

Spirit Rider wrote:Both the employee elective deferral limit (2016/17 = $18K) and the employee + employer annual addition limit (2016 = $53K, 2017 = $54K) are contribution limits.

When and if you do rollovers is irrelevant.


Thanks so much for clarifying.
by airahcaz
Tue Nov 15, 2016 10:36 am
Forum: Investing - Help with Personal Investments
Topic: $53K limit for Defined Contribution Plans
Replies: 5
Views: 664

Re: $53K limit for Defined Contribution Plans

If the last after-tax contribution is Dec 31, 2016, do I have 60 days (in 2017) to roll it over for it to count towards the $53K limit for 2016, and not impact the 2017 limit?
by airahcaz
Mon Nov 14, 2016 7:11 pm
Forum: Forum Issues and Administration
Topic: The Forum is now "Feed friendly"
Replies: 46
Views: 4581

Re: The Forum is now "Feed friendly"

airahcaz - Do you have the Firefox browser? It supports the feeds directly as part of its "Live bookmarks" feature. If you want to get a sense of what the feed should look like, just click on the feed links and view them in Firefox. This doesn't answer your question, but I wanted to at le...

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