Roth conversion advice

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xrayvsn
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Roth conversion advice

Post by xrayvsn » Sat Jan 13, 2018 10:48 pm

I have been doing more research and this really does make sense for me but I have some specifics I was hoping someone might help advise me on.

Unfortunately I have not taken advantage of the backdoor Roth conversion in the past and have been putting in money for awhile into a traditional IRA. Now what I am to understand is that because these contributions were using after tax money (since my income phased out the deductions available) I have established a basis (which I assume is total amount I have from all the Form 8606s in past.

My current traditional IRA balance is higher than this basis due to capital gains etc. For simplicity sake lets say I have $25,000 in after tax money that I contributed and the account is worth $100k.

Can I do this to help minimize my tax burden with a conversion?:
1) Convert assets totaling (or slightly under) the $25,000 basis I have into a Roth IRA this year (and essentially pay no taxes on conversion)
2) In order to avoid the pro rata rule on the balance of $75k left, then roll the remaining assets into my 401k

Appreciate the help.

PFInterest
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Re: Roth conversion advice

Post by PFInterest » Sat Jan 13, 2018 11:28 pm

You roll the deducted portion to a 401k. You roll the after tax to a rIRA.

xrayvsn
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Re: Roth conversion advice

Post by xrayvsn » Sun Jan 14, 2018 2:17 am

Thanks. And if I did the rollover (the contributions that were deductible as well as any gains) into the 401k by Dec 31 of the year I do the roth Conversion with the after tax contribution amount I won't incur any tax at all, correct?

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LadyGeek
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Re: Roth conversion advice

Post by LadyGeek » Sun Jan 14, 2018 10:54 am

New member boglemania has a question which I've moved into a stand-alone thread. See: [Should I do a Roth conversion?]

This thread is now in the Personal Finance (Not Investing) forum (Roth conversion).
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