Vanguard Backdoor Roth Conversion (Old Mutual Fund Acct vs. New Brokerage Acct)

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Topic Author
totalnoobie
Posts: 94
Joined: Thu Dec 31, 2015 10:33 pm

Vanguard Backdoor Roth Conversion (Old Mutual Fund Acct vs. New Brokerage Acct)

Post by totalnoobie »

Hi all,

I have a new Vanguard brokerage account where I've been doing the backdoor Roth for a few years now. It's very simple, I contribute nondeductible $ into a TIRA, then in the balances and holdings, there's an explicit option to "convert to Roth IRA". Great!

My spouse has the old style mutual fund account, and apparently we've forgotten to convert the TIRA into Roth for several years now :oops: But no big deal, I went in to do the conversion, but the "convert to Roth IRA" option was not available. I Googled around and saw this post (http://www.physicianonfire.com/backdoor/) which has screencaps that look just like my spouse (I guess he must have the old style account as well). But going to "retirement contributions and distributions" only allows conversion of one year at a time. So instead I simply went under "buy and sell" and did an "exchange" of funds from TIRA into the existing Roth IRA.

I'm hoping that I did this correctly in the old mutual fund account. Are there any tax implications of doing it this way? Oddly enough, when I convert in my Brokerage account, Vanguard says they CANNOT withhold any taxes. When I converted in my spouse's old MF account, Vanguard says they can withhold if it is at least 10%. I hope we'll still get the right tax forms for my spouse's multiyear conversion.

Hope there are enough old MF account holdouts that this post is still relevant.
PFInterest
Posts: 2684
Joined: Sun Jan 08, 2017 12:25 pm

Re: Vanguard Backdoor Roth Conversion (Old Mutual Fund Acct vs. New Brokerage Acct)

Post by PFInterest »

Should be fine.
User avatar
Duckie
Posts: 7837
Joined: Thu Mar 08, 2007 2:55 pm

Re: Vanguard Backdoor Roth Conversion (Old Mutual Fund Acct vs. New Brokerage Acct)

Post by Duckie »

totalnoobie wrote:Oddly enough, when I convert in my Brokerage account, Vanguard says they CANNOT withhold any taxes. When I converted in my spouse's old MF account, Vanguard says they can withhold if it is at least 10%. I hope we'll still get the right tax forms for my spouse's multiyear conversion.
When she converted did she choose to withhold taxes? I hope not.
Topic Author
totalnoobie
Posts: 94
Joined: Thu Dec 31, 2015 10:33 pm

Re: Vanguard Backdoor Roth Conversion (Old Mutual Fund Acct vs. New Brokerage Acct)

Post by totalnoobie »

Duckie wrote:
totalnoobie wrote:Oddly enough, when I convert in my Brokerage account, Vanguard says they CANNOT withhold any taxes. When I converted in my spouse's old MF account, Vanguard says they can withhold if it is at least 10%. I hope we'll still get the right tax forms for my spouse's multiyear conversion.
When she converted did she choose to withhold taxes? I hope not.
No, we declined to withhold both federal and state taxes. I'm hoping that this will give the same end result as what I've been doing within my brokerage account where the conversion was easy and I didn't even have the ability to withhold taxes.
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