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We've got my husband's IRAs (both traditional and Roth) set up at Fidelity. We've transferred $6K into his traditional and waiting for it to fully arrive before converting it to his Roth.

My husband is now getting cold feet about completely leaving Vanguard. He wants to know, would there be anything bad about leaving his tiny IRA at Vanguard, but converting it to a Roth there, IN ADDITION to having all his new contributions and conversions be at Fidelity? Would there be much of a downside to keeping this small foot in the door at Vanguard?

Its a mutual fund, not an ETF.

We're comfortable with selling it.

Thanks for the input, appreciated!

Another stupid question:

I'm looking at the Fidelity website. For opening a new IRA account, it lists three options: Traditional IRA, Roth IRA and Rollover IRA. Should I select the Traditional IRA to start with and then do the rollover from Fidelity manually (or on the phone with customer service) or should I select the Rollover option to start with, or does it matter?

So, please help us understand the best way to proceed. Your husband should: Open a TIRA and Roth IRA at Fidelity. Roll the tiny TIRA at Vanguard into the TIRA at Fidelity by having Fidelity "pull" the cash over. That avoids creating a Roth IRA at Vanguard. The Fidelity TIRA should hold just the settlement fund to avoid losses and minimize gains. Make the non-deductible contribution to the Fidelity TIRA for 2022. Immediately convert the entire TIRA (100%) including the rollover to the Roth IRA. When you file your 2022 taxes your husband will fill out the 2022 Form 8606 Part I for the non-deductible contribution. When you file your 2023 taxes your husband will fill out the 2023 Form 8606 to report the conversions and any 2023 non-d...

Thank you all! Very helpful.

If we move the tiny tIRA out of Vanguard, will that mean the Vanguard IRA account is closed? He doesn't really want to close it completely yet.

Husband wants to try Fidelity for awhile to see how he likes using the platform/software. He wants to keep the option open of coming back to Vanguard if he decides he doesn't like using Fidelity (the functionality of the site itself and customer service if he needs to call for something.)

You can have IRAs at more than one place, right? As long as you don't go over your yearly contribution limit (combined)?

My husband's 401K is with TIAA and he hates the site/platform so much he wants something opposite and as easy and user-friendly as possible for his IRA.

2022 was the first year either my husband or I have contributed to IRAs. Many kind people on this forum helped me understand the rules surrounding converting my tIRA to a Roth. I couldn't have done it without you, thank you! Now let’s turn our focus to my husband’s IRA. He has not contributed anything yet. He wants, if possible, to set up a tIRA and convert it to a Roth for 2022 and for each year going forward (like I’m doing.) However, his situation is more complicated. He has a very small tIRA in Vanguard (approx. $400) that was created in 2008 when he changed jobs and his 401K was transferred from Vanguard to TIAA Cref. He actually didn’t even realize he had this tiny tIRA until a couple months ago. So, please help us understand the best...

Thank you. That sounds like a good plan, we will do that.

Tomorrow, I'm going to start a new thread and ask for guidance regarding my husband's IRA situation. I hope you and the other kind people who have helped me with my IRA will chime in and help us with his as well.

Many thanks!

Thanks Duckie.

My husband and I will use TurboTax software. (Unless a different software is recommended instead.)

Thank you Duckie for your answers and for catching that I didn't need to fill out the page. (Sorry I'm slow with this!)

For the second page, "Part II (Conversions)", I filled in "0" for line 16 where it says:

"If you completed Part 1, enter the amount from line 8. Otherwise, enter the net amount you converted from traditional, SEP, and SIMPLE IRAs to Roth IRAs in 2022."

Was I correct in putting "0" since I did the whole conversion in January 2023 (for my 2022 contributions)? Or should I instead put the whole amount converted (in January) because the conversion was for 2022's contributions?

Thanks

Another question:

I'm now making contributions to my tIRA for 2023 and converting them to my Roth. I'm using Schwab. When I go to make the conversation, the site asks me if I want federal and state taxes withheld (see screenshot below). Is the answer no?

Would someone mind taking a look at my practice 8606. I think I have it right but I'd feel more confident if you all think it's right too.

One question: for line 2, I entered "0" per the instructions because this is my first year with any kind of IRA. However, I'm continually adding $ to my traditional IRA and moving it to my Roth for 2023, so there is some money in the tIRA off and on. I'm assuming this is not counted because its not staying there and because it is for 2023 and not 2022. Correct?

Thank you FiveK!

Thanks everyone, I really appreciate all the help and patience as I learn.

I feel comfortable that I've completed my 8606 form accurately now.

You all have warned me that tax prep software often doesn't understand how to handle these conversions, which is one reason it is good to do the 8606 by hand to help you double check the software or preparer results.

What is the software you recommend to do our taxes with? Are some more understanding of these conversions than others? We've used TurboTax in the past, but I'm not wedded to it. Any tips for getting whichever software we go with to understand and accurately handle the conversion?

Is rounding cents to the nearest dollar the same on form 8606 as it is on other tax documents/forms? Round up if it is .5 or over, down if .49 or under?

Thank you Five K! Very helpful.

Are you getting the same results by hand as that spreadsheet page does?

I opened the spreadsheet and found the mention of the 8606 form in the instructions page, but I don't know Excel hardly at all, and didn't know how to find the actual page with the form, and it all just looks like jumbled spaghetti to me. So to answer your question, no, I don't know how to work with it.

Okay, I understand now. Thanks for the explanation!

I will make sure to finish contributing to my tIRA and convert to Roth well ahead of Dec 31, 2023.

You can always check your work by posting your entries here. As I think you will discover, this is a straightforward form if you are simply contributing and converting 100%, and easiest if contributions and conversions are done in the same year.

I tried to post an image of the hand filled-in form but was unable to. Is there a simple way to post it without setting up an account with an image sharing site? Seems so clunky that way.

Hi Little Star, thank you for taking the time to walk me through this. I feel the most comfortable doing the tIRA to Roth conversion every year, and keeping my tIRA contributions non-deductible because it seems the most straightforward way to proceed and I need to keep things simple for me to understand what I'm doing. There is one thing in your response that I'd like you to explain more because I don't quite understand: it is pretty straightforward to do the backdoor Roth process (provided you do not have $$ in a traditional IRA on December 31 of the year in which you do the Roth conversion). and ...potential tax implications if you have $$ in a traditional IRA on Dec 31. See my previous post if you would be so kind -- I converted my tIRA ...

I'm doing a practice 8606 by hand and have a question. Line 8 states: "Enter the net amount you converted from traditional, SEP and SIMPLE IRAs to Roth IRAs in 2022. Also, enter this amount on line 16." I waited until January 2023 to do my tIRA to Roth conversion, even though I made some contributions to my tIRA in 2022. So does that mean I put "0" for Line 8 since I didn't do the conversion in the calendar year of 2022? Or do I put the total amount I converted of in Jan 2023 which includes my 2022 contributions? Is this what Little Star means above by saying "... it is pretty straightforward to do the backdoor Roth process (provided you do not have $$ in a traditional IRA on December 31 of the year in which you do ...

placeholder wrote: ↑Thu Jan 26, 2023 12:17 am I'm not sure your other question was answered but yes convert whatever amount of 2023 that you have made so far to keep its value from changing and to make it easier because you can just convert the entire balance then deal with the rest of 2023 down the line.

Thank you! Yes, thanks to the guidance from all of you on this thread, I did it this morning! (Whew, its a relief having it done, and understanding better what I'm doing for the future.)

Thanks so much to everyone!

FiveK wrote: ↑Wed Jan 25, 2023 8:57 pm

WoodSprite wrote: ↑Wed Jan 25, 2023 8:44 pm One more question.

In the future, can I just convert cash from my TIRA to my Roth? Am I allowed to contribute cash into one and then convert it to the other without having to buy something first? I just read that I could, but wanted to double check because that seems too easy! Gosh I feel so stupid!

Not only can you, but it's the simplest way to proceed.

Thank you! Yes, that is how I will proceed in the future. (Doh! I'm learning!)

You could play with something like the 'Form8606' tab in the personal finance toolbox spreadsheet to see what different choices over several years would do to, or for, you.

Wow, this looks very useful. Thanks for the link!

One more question.

In the future, can I just convert cash from my TIRA to my Roth? Am I allowed to contribute cash into one and then convert it to the other without having to buy something first? I just read that I could, but wanted to double check because that seems too easy! Gosh I feel so stupid!

Thank you! If you will at least occasionally need to use the backdoor Roth IRA method you should not make deductible contributions. They will mess up things because of the dreaded pro-rata rule . I read the link and the language is complicated for a newbie like me, but I think I get the gist. So, because of the rule, and because my husband and I expect to be over the limit for the Roth more years than not, your advice is to NOT deduct any of my contributions to my TIRA, even if I am able to do so? (I'm not sure if I able to do so or not yet because I haven't calculated our MAGI yet, the $230,000 I listed above, is our roughly calculated AGI. I don't know yet how much our MAGI will be different from our AGI since this is the first year I'm d...

Thanks @Duckie and @FiveK, much appreciated! I am reading over your answers and also the many pages of IRS instruction documents and have more questions. 1. I'm married, and we file our taxes jointly. Do each of us have to submit a separate 8606 (we are both doing a TIRA to Roth conversion) or do we submit one combined 8606? 2. I don’t make a lot of money, but my spouse does. Combined, we are usually over the Roth limit (our incomes vary year-to-year). I assumed that my contributions to a TIRA would NOT be deductible because our combined income this past year was about $230K and because my spouse contributed about $25,000 to a 401K, (I don’t have a 401K). Am I correct to assume my TIRA contributes are NOT deductible? As I read over the IRA ...

Again, many thanks FiveK!

Have you filled a draft version of 8606 to see how it works?

No, but I will find one tomorrow and do a draft. Do you recommend I do this before I begin converting?

Thank you @FiveK. Can you explain your answer to question #1 a little more for me. (Sorry, I'm very new at all this and you're going to need to spell it out for me in very simple terms). If I convert the whole $6,200 to a Roth, then will the extra $200 (above the $6K limit for last year) still be considered as part of my Roth contributions for last year? Or will it be considered part of this year's contributions? I also don't understand this part of what you said "The $200 will be taxable for 2023 (on the return you do in 2024)". How do you mean taxable, as in I can't subtract it from my income for last year? I was under the assumption that I wouldn't be able to subtract any of these contributions from my income. (Or do you mean t...

First time Roth questions: 2022 was the first year I’ve had any kind of IRA, so I am very new at all of this. My household makes over the ROTH limit, so I created a TIRA in Schwab with the intention of backdooring it to a ROTH. I finish funding 2022 just last week (Jan 20th 2023) and now I want to backdoor it. (I know I could have & should have transferred it sooner, at least in parts, but my attention was taken up by two seriously ill parents I am caring for in addition to working full time, and I did not keep on top of this like I should have). Here are my questions: For 2022: 1. As I understand it, my maximum contribution for 2022 was $6,000 (I am under 50). My investments (overall) went up, so now the money I contributed in 2022 is...

Thank you @ruralavalon @mhalley and @placeholder This is the first year I am doing any type of IRA, so I'm learning as I'm going. I created a traditional IRA (which I believe is non-deductible) because our household is over the limit for opening a Roth. However, I created the traditional IRA with the intention of converting it to a Roth through the backdoor method, because I do not want to pay taxes on it when I begin withdrawing it down the road when I am retired. I plan to roll it over to Roth this year, the same year I opened it. Is there an amount of time I have to wait before I can roll it over, or can I do that as soon as I am done putting money in for the year? I haven't hit my $6K limit yet, but will at the end of this month (Decemb...

WoodSprite , welcome to the forum. Does the money I contribute to my traditional IRA count "against" my earnings total in the eyes of Social Security earned income? No. SS earned income (aka SS wages on W-2) is not the same as taxable income. If the money I contribute to my traditional IRA lowers my earned income as recorded by the SSA, then will rolling it into a backdoor Roth change this? Since it doesn't reduce your SS earned income in the first place, no. Would putting $ into a Roth instead of a traditional IRA NOT count against my earned income recorded by the SSA? Whether a deductible TIRA contribution, a non-deductible TIRA contribution, or a Roth IRA contribution, none of them reduces your SS earned income. What else shou...

Hi, I'm new to the Bogleheads and also new to the financial world in general, so please be kind to me even if my question is a very beginner one. This is the first year I've contributed to an IRA. I did a traditional IRA because our combined household income is over the threshold for Roth. HOWEVER, I personally only make a very small amount of money each year. Here are my questions: 1. Does the money I contribute to my traditional IRA count "against" my earnings total in the eyes of Social Security earned income? I'd like the SSA to record as high of income as possible for me so that down the road when I retire (not for another 15-20 years) I'll show more earned income instead of less. 2. If the money I contribute to my traditiona...