Backdoor Roth Question

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Saphomd
Posts: 165
Joined: Tue Apr 03, 2012 6:11 pm
Location: SF, CA

Backdoor Roth Question

Post by Saphomd » Sat Dec 24, 2016 3:59 pm

Must I open a traditional brokerage IRA to convert to a backdoor Roth IRA? Or is it possible to open a traditional non-brokerage IRA?

Thanks.

User avatar
neurosphere
Posts: 2599
Joined: Sun Jan 17, 2010 1:55 pm
Location: NYC

Re: Backdoor Roth Question

Post by neurosphere » Sat Dec 24, 2016 4:12 pm

The exact nature of the IRA is not relevant. You need to make a traditional IRA contribution for the first step of a backdoor Roth contribution. That's it. Whether it is a brokerage account or non-brokerage is not important.
-- Real name: Sotirios Keros. If you have to ask "Is a Target Retirement fund right for me?", the answer is yes.

Saphomd
Posts: 165
Joined: Tue Apr 03, 2012 6:11 pm
Location: SF, CA

Re: Backdoor Roth Question

Post by Saphomd » Sat Dec 24, 2016 4:37 pm

Thanks. I already made my contribution to Vanguard which is in a traditional Brokerage IRA ( Federal money market settlement fund). This is what Vanguard set up for me. However, on the website, they want me to open up a new Roth Brokerage. It wont allow me to contribute to my regular Roth IRA which I already have ( non-brokerage). Vanguard did not give me the option to open a traditional ira settlement fund, unless I could have.

User avatar
Duckie
Posts: 5080
Joined: Thu Mar 08, 2007 2:55 pm

Re: Backdoor Roth Question

Post by Duckie » Sat Dec 24, 2016 5:45 pm

Saphomd wrote:However, on the website, they want me to open up a new Roth Brokerage. It wont allow me to contribute to my regular Roth IRA which I already have ( non-brokerage).

Vanguard is only opening new accounts on the brokerage side. Since you didn't have a TIRA on the mutual fund side you had to open one on the b-side. You will have to open a Roth IRA on the b-side, too, because you can't shift stuff back to the mf-side (you can't convert a TIRA on the b-side to a Roth IRA on the mf-side). Eventually your mf-side Roth IRA will be migrated to the b-side Roth IRA.

User avatar
Earl Lemongrab
Posts: 2902
Joined: Tue Jun 10, 2014 1:14 am

Re: Backdoor Roth Question

Post by Earl Lemongrab » Mon Dec 26, 2016 11:36 am

There's no requirement to open a new Roth IRA for the backdoor. Just convert into the existing account if that's where you want it.
This week's fortune cookie: "You will do well to expand your horizons." Ow. Passive-aggressive and vaguely ominous.

Post Reply