Question on Roth conversions

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MDfan
Posts: 79
Joined: Tue Oct 18, 2016 7:32 am

Question on Roth conversions

Post by MDfan » Mon Oct 29, 2018 6:27 am

I have a question regarding Roth conversions and I was wondering if someone could advise me on whether this is a good plan or if I'm missing something. Right now, we have the bulk of our money tied up in taxable accounts (TSP, 403b). We make too much for regular Roth so I am trying to figure out ways to get some $ into Roth accounts in other ways. We have used the backdoor strategy for my wife who holds no other IRAs other than an inherited IRA. I'd like to do it as well, but right now I hold an IRA (rollover 401K from a previous job) with about $100k with Vanguard. Under the aggregation rules, this makes it difficult for me to use the backdoor Roth strategy. Would it make any sense for me to transfer my existing Vanguard IRA into my TSP account (allowed) so that I can then fund another IRA and then start doing Roth conversions each year? Assuming this is allowed by the IRS. Hope this makes sense.

JW-Retired
Posts: 6998
Joined: Sun Dec 16, 2007 12:25 pm

Re: Question on Roth conversions

Post by JW-Retired » Mon Oct 29, 2018 6:49 am

MDfan wrote:
Mon Oct 29, 2018 6:27 am
I'd like to do it as well, but right now I hold an IRA (rollover 401K from a previous job) with about $100k with Vanguard. Under the aggregation rules, this makes it difficult for me to use the backdoor Roth strategy. Would it make any sense for me to transfer my existing Vanguard IRA into my TSP account (allowed) so that I can then fund another IRA and then start doing Roth conversions each year? Assuming this is allowed by the IRS. Hope this makes sense.
Yes, perfect sense. IRS does allow it. Once you have no other tIRAs/rollover IRAs/SEP or Simple IRAs in your name, you are a go to do the backdoor Roth.
JW
ps: get the rollover IRA into your TSP before you do anything else. It has to be hidden from the backdoor Roth maneuver as of the last day of the year and sometimes these things get bogged down. Plus get familiar with the IRS 8606 form that documents the backdoor.
Retired at Last

The Wizard
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Joined: Tue Mar 23, 2010 1:45 pm
Location: Reading, MA

Re: Question on Roth conversions

Post by The Wizard » Mon Oct 29, 2018 10:21 am

MDfan wrote:
Mon Oct 29, 2018 6:27 am
I have a question regarding Roth conversions and I was wondering if someone could advise me on whether this is a good plan or if I'm missing something. Right now, we have the bulk of our money tied up in taxable accounts (TSP, 403b)...
Those are more correctly called tax-DEFERRED accounts...
Attempted new signature...

MDfan
Posts: 79
Joined: Tue Oct 18, 2016 7:32 am

Re: Question on Roth conversions

Post by MDfan » Mon Oct 29, 2018 10:50 am

The Wizard wrote:
Mon Oct 29, 2018 10:21 am
MDfan wrote:
Mon Oct 29, 2018 6:27 am
I have a question regarding Roth conversions and I was wondering if someone could advise me on whether this is a good plan or if I'm missing something. Right now, we have the bulk of our money tied up in taxable accounts (TSP, 403b)...
Those are more correctly called tax-DEFERRED accounts...
You're right. I knew what I meant. :happy

retiredjg
Posts: 34385
Joined: Thu Jan 10, 2008 12:56 pm

Re: Question on Roth conversions

Post by retiredjg » Mon Oct 29, 2018 12:12 pm

The TSP will take your rollover IRA, but it all has to start with the forms the TSP provides. So start there.

MDfan
Posts: 79
Joined: Tue Oct 18, 2016 7:32 am

Re: Question on Roth conversions

Post by MDfan » Mon Oct 29, 2018 12:29 pm

Thanks. I know the TSP will do it and I have the TSP-60 Form. I was just wondering if there was anything prohibiting me from doing this. Or a good reason why I shouldn't.

retiredjg
Posts: 34385
Joined: Thu Jan 10, 2008 12:56 pm

Re: Question on Roth conversions

Post by retiredjg » Mon Oct 29, 2018 1:18 pm

I can't think of any reason not to do it.

MDfan
Posts: 79
Joined: Tue Oct 18, 2016 7:32 am

Re: Question on Roth conversions

Post by MDfan » Mon Oct 29, 2018 1:30 pm

Thanks for the feedback.

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