When do you make your 2013 backdoor roth contribution?

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berg
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When do you make your 2013 backdoor roth contribution?

Post by berg » Wed Mar 20, 2013 9:08 pm

I'm new to the backdoor roth. I just made my wife's and my 2012 traditional IRA contributions at Vanguard and will convert these to a Roth in the next few days.

My question is when do you usually make your contributions for the backdoor? Since it seems like the way to go is a lump sum move, instead of monthly dollar cost averaging, do you usually do it early in the year or late in the year?

I guess since I just made a $10k investment, it might make sense to wait a bit for 2013 to try to dollar cost average a bit. Interested what everyone else does. Thanks!

harikaried
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Re: When do you make your 2013 backdoor roth contribution?

Post by harikaried » Wed Mar 20, 2013 9:22 pm

Are you sure you'll need to backdoor into a Roth through a Traditional for 2013? What fraction would the 2013 Roth contributions be compared to overall investments across 401k, brokerage, existing Roth, (no Traditional), etc?

You could save yourself some work by just contributing for both 2012 and 2013 and converting both in one go. But at least from my experience at Vanguard and Fidelity, these conversions are as simple as a sell to buy order.

Personally, I put in my 2013 contribution about a month ago and for my wife a couple weeks ago. We waited because we needed to do some recharacterizations before filing 2012 taxes, and I didn't want Fidelity to mess things up with this extra contribution to consider.

Bacchus01
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Re: When do you make your 2013 backdoor roth contribution?

Post by Bacchus01 » Wed Mar 20, 2013 9:33 pm

I do it all on Jan 1st (or as soon as possible) and generallly do the funding and the conversion at the same time (although it takes 48 hours to hit everything).

Bharat
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Re: When do you make your 2013 backdoor roth contribution?

Post by Bharat » Wed Mar 20, 2013 9:54 pm

Bacchus01 wrote:I do it all on Jan 1st (or as soon as possible) and generallly do the funding and the conversion at the same time (although it takes 48 hours to hit everything).


Same here.
Everything that you own, owns piece of you.

assumer
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Re: When do you make your 2013 backdoor roth contribution?

Post by assumer » Wed Mar 20, 2013 10:25 pm

How exactly does it work? Do all your "backdoor rollovers" get aggregated into a single "roth IRA" account? Do they appear as separate rollover IRA's? And does that mean that each year you are opening a new traditional IRA to do the rollover?

Iorek
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Re: When do you make your 2013 backdoor roth contribution?

Post by Iorek » Wed Mar 20, 2013 10:44 pm

assumer wrote:How exactly does it work? Do all your "backdoor rollovers" get aggregated into a single "roth IRA" account? Do they appear as separate rollover IRA's? And does that mean that each year you are opening a new traditional IRA to do the rollover?


For me my traditional IRA account stays open, so I purchase shares for my traditional IRA account and then later transfer them to my Roth conversion IRA account.

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Duckie
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Re: When do you make your 2013 backdoor roth contribution?

Post by Duckie » Wed Mar 20, 2013 10:50 pm

assumer wrote:How exactly does it work? Do all your "backdoor rollovers" get aggregated into a single "roth IRA" account? Do they appear as separate rollover IRA's? And does that mean that each year you are opening a new traditional IRA to do the rollover?

Let's say you're starting fresh. No IRAs period. You open a Traditional IRA and fund it. Two days later you convert it to a Roth IRA. Now the TIRA is empty. It still exists (at least at Vanguard) for about a year. Next January you contribute again to the empty TIRA (which is still sitting there) then convert to the existing Roth IRA. Unless you have another Roth IRA somewhere else, you're only going to have the two accounts.

And if the TIRA disappears for some reason, you just open another one. It's not a big deal.

assumer
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Re: When do you make your 2013 backdoor roth contribution?

Post by assumer » Thu Mar 21, 2013 9:12 am

Thanks, duckie. That seems quite simple, actually. I look forward to being in such an income bracket where I have to jump through those hoops one day :happy

Grt2bOutdoors
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Re: When do you make your 2013 backdoor roth contribution?

Post by Grt2bOutdoors » Thu Mar 21, 2013 9:24 am

When I have the funding to do so.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

vshun
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Re: When do you make your 2013 backdoor roth contribution?

Post by vshun » Thu Mar 21, 2013 9:43 am

I also did it for the first time this year and in one loop. For me the trigger was filing taxes and checking if we fall into or after the phaseout zone in Roth, so did it like 3 weeks ago.
As others said, first step open for yourself and wife Traditional IRA in vanguard and put 5.5K. Once it posts, login to your Roth account, post Buy transaction and fund it from Traditional IRA. Funds will be moved and balance will show 0. And make sure you do not have any rollover IRA or other traditional deductible IRA or taxes may not make it worthwhile (I converted wife's rollover IRA to Roth at the end of last year anticipating the situation).

STC
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Re: When do you make your 2013 backdoor roth contribution?

Post by STC » Thu Mar 21, 2013 10:43 am

Started it on Jan 1 this year. I forget how long it took for funds to clear then roll-over into the Roth. But definitely was done by Jan 10th for both me and my wife. Good luck!

Process
Fund Trad IRA > Wait for funds to clear > Roll over to rIRA > Purchase investment

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kingsnake
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Re: When do you make your 2013 backdoor roth contribution?

Post by kingsnake » Thu Mar 21, 2013 4:30 pm

Already did it for my wife and I for 2013.

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sometimesinvestor
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Re: When do you make your 2013 backdoor roth contribution?

Post by sometimesinvestor » Fri Mar 22, 2013 3:10 pm

If you feel you want to dollar cost average you could contibute to the money market fund or short term bond fund. Do the backdoor asap and then slowly move into vanguard star (suggested because of low minimum) I am uncertain the steps you need to take to avoid minimum balance fees but am sure its on the web site. It might be as simple as not getting paper statements.

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