Traditional IRA rollover to 403b witholding amount

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Topic Author
Hanopol
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Traditional IRA rollover to 403b witholding amount

Post by Hanopol »

Hello Bogleheads. First off, thanks in advance for continuing to enrich my knowledge in finance/retirement savings.
Thanks to Alan S., Ruralavalon, and Duckie for their guidance.
I have a Vanguard TIRA that I wish to rollover to my employer sponsored 403b account. I have confirmed that my 403b plan accepts rollovers.
My question is what amount of witholding should I indicate on the Vanguard rollover document? It's confusing to me, because this is a rollover, and not a distribution. So, my choices are not to withold, withold at 10%, or withold at a greater amount. Also, it's the gains that are taxed and not the basis, right?
The purpose of this is to zero out my TIRA before year's end. I am funding a ROTH IRA backdoor meanwhile.
Many thanks.
ofckrupke
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Re: Traditional IRA rollover to 403b witholding amount

Post by ofckrupke »

Withhold zero for this operation. If you withhold more than zero, you will incur a tax liability on the amount withheld itself; after all, this portion of the IRA liquidation will be a distribution from the IRA to what amounts to a taxable, zero-interest-bearing escrow account held by the government. The only difference between withholding some amount and sending the same amount to you directly is who ends up holding the funds through tax season.
GrowthSeeker
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Re: Traditional IRA rollover to 403b witholding amount

Post by GrowthSeeker »

Hanopol wrote: Fri Nov 16, 2018 3:39 pm Hello Bogleheads. First off, thanks in advance for continuing to enrich my knowledge in finance/retirement savings.
Thanks to Alan S., Ruralavalon, and Duckie for their guidance.
I have a Vanguard TIRA that I wish to rollover to my employer sponsored 403b account. I have confirmed that my 403b plan accepts rollovers.
My question is what amount of witholding should I indicate on the Vanguard rollover document? It's confusing to me, because this is a rollover, and not a distribution. So, my choices are not to withold, withold at 10%, or withold at a greater amount. Also, it's the gains that are taxed and not the basis, right?
The purpose of this is to zero out my TIRA before year's end. I am funding a ROTH IRA backdoor meanwhile.
Many thanks.
My understanding is that you can roll into the 403b the entire amount of your tIRA minus the amount of any tIRA contributions which were made in a non-deductible fashion (i.e. post tax dollars were used for those IRA contributions). AFAIK, you cannot roll those dollars (which were contributed after you paid tax on them) into the 403b. After that is completed, you can {step 2} convert the remaining (post tax) dollars in your tIRA to Roth IRA.

The deductible tIRA money which goes into the 403b should not be associated with any withholding. I believe you get a 1099-R from the IRA company for the amount rolled into the 403b (maybe another one for the Roth conversion if you do that, not sure).
Just because you're paranoid doesn't mean they're NOT out to get you.
Topic Author
Hanopol
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Re: Traditional IRA rollover to 403b witholding amount

Post by Hanopol »

GrowthSeeker wrote: Fri Nov 16, 2018 3:59 pm
Hanopol wrote: Fri Nov 16, 2018 3:39 pm Hello Bogleheads. First off, thanks in advance for continuing to enrich my knowledge in finance/retirement savings.
Thanks to Alan S., Ruralavalon, and Duckie for their guidance.
I have a Vanguard TIRA that I wish to rollover to my employer sponsored 403b account. I have confirmed that my 403b plan accepts rollovers.
My question is what amount of witholding should I indicate on the Vanguard rollover document? It's confusing to me, because this is a rollover, and not a distribution. So, my choices are not to withold, withold at 10%, or withold at a greater amount. Also, it's the gains that are taxed and not the basis, right?
The purpose of this is to zero out my TIRA before year's end. I am funding a ROTH IRA backdoor meanwhile.
Many thanks.
My understanding is that you can roll into the 403b the entire amount of your tIRA minus the amount of any tIRA contributions which were made in a non-deductible fashion (i.e. post tax dollars were used for those IRA contributions). AFAIK, you cannot roll those dollars (which were contributed after you paid tax on them) into the 403b. After that is completed, you can {step 2} convert the remaining (post tax) dollars in your tIRA to Roth IRA.

The deductible tIRA money which goes into the 403b should not be associated with any withholding. I believe you get a 1099-R from the IRA company for the amount rolled into the 403b (maybe another one for the Roth conversion if you do that, not sure).
OP here. I would like to confirm that this TIRA is non deductible and funded with after tax dollars. In speaking with my employer 403b plan administrator, I cannot roll over any after tax TIRA funds into this account since it is after tax dollars.
It is not a huge amount, but are there any other means to take this money out of my TIRA, short of doing a direct distribution?
Thanks for all the replies, truly grateful.
ofckrupke
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Re: Traditional IRA rollover to 403b witholding amount

Post by ofckrupke »

Hanopol wrote: Fri Nov 16, 2018 5:00 pm are there any other means to take this money out of my TIRA, short of doing a direct distribution?
It's only after-tax to the extent of its basis as calculated in the form 8606 for the most recent year any non-deductible rollover or contribution to, or conversion from, any IRA you own. That is, if you made one 5k non-deductible contribution at some point in the past and that grew tax deferred to 45k now, then the internal revenue code and regulations, and many employer plans, do permit rolling the not-previously-taxed 40k in.

But if the tax deferred growth above basis is relatively small, or the employer plan has more stringent requirements to roll in than required by law: then just Roth convert the whole thing along with your non-deductible 2018 contribution. If you can't cash flow the whole tax liability this year on the pre-tax part, then convert half, then the other half in early January; in this case delaying your 2018 contribution until 2019 will avoid pro rata dilution of the amount converted in 2018.
Last edited by ofckrupke on Fri Nov 16, 2018 5:34 pm, edited 1 time in total.
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retiredjg
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Re: Traditional IRA rollover to 403b witholding amount

Post by retiredjg »

Hanopol wrote: Fri Nov 16, 2018 5:00 pm OP here. I would like to confirm that this TIRA is non deductible and funded with after tax dollars. In speaking with my employer 403b plan administrator, I cannot roll over any after tax TIRA funds into this account since it is after tax dollars.
That is correct.

If all your contributions were non-deductible, they should be recorded on Form 8606 for each year you made a non-deductible contribution. That money CANNOT go into the 403b.

However, the earnings that have occurred in the IRA are pre-tax. Those can go into the 403b if they will accept it. Then you could convert the rest to Roth with little to no tax.

If you have not been doing the Form 8606 each year, more discussion needs to happen about that.
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Duckie
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Re: Traditional IRA rollover to 403b witholding amount

Post by Duckie »

Hanopol wrote:I would like to confirm that this TIRA is non deductible and funded with after tax dollars. In speaking with my employer 403b plan administrator, I cannot roll over any after tax TIRA funds into this account since it is after tax dollars.
It is not a huge amount, but are there any other means to take this money out of my TIRA, short of doing a direct distribution?
You roll over the earnings (the total amount minus your non-deductible contribution basis) to the 403b plan. You do not have any taxes withheld. Then you convert the remainder (the non-deductible contribution basis) to a Roth IRA. That zeros out the TIRA. You do not have any taxes withheld.

Do all of this before you start the backdoor Roth process.
Topic Author
Hanopol
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Re: Traditional IRA rollover to 403b witholding amount

Post by Hanopol »

Duckie wrote: Fri Nov 16, 2018 5:35 pm
Hanopol wrote:I would like to confirm that this TIRA is non deductible and funded with after tax dollars. In speaking with my employer 403b plan administrator, I cannot roll over any after tax TIRA funds into this account since it is after tax dollars.
It is not a huge amount, but are there any other means to take this money out of my TIRA, short of doing a direct distribution?
You roll over the earnings (the total amount minus your non-deductible contribution basis) to the 403b plan. You do not have any taxes withheld. Then you convert the remainder (the non-deductible contribution basis) to a Roth IRA. That zeros out the TIRA. You do not have any taxes withheld.

Do all of this before you start the backdoor Roth process.
Thanks, Duckie.
What will happen if I end up just converting part of the TIRA to ROTH (I still have $1500 space for 2018 for ROTH backdoor), then convert the rest about $2500 to 2019 ROTH? I suppose this will trigger a bigger tax.
Also, I have been filling out 8606, keeping track of my basis.
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Duckie
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Re: Traditional IRA rollover to 403b witholding amount

Post by Duckie »

Hanopol wrote:What will happen if I end up just converting part of the TIRA to ROTH (I still have $1500 space for 2018 for ROTH backdoor), then convert the rest about $2500 to 2019 ROTH?
You can make many conversions in a year. They'll be totaled into one number on the 1099-R. But don't convert anything until you have rolled the pre-tax portion to the 403b plan. There are no more do-overs. For safety the rollover has to happen first.

So you've already contributed $4000 for 2018? And you're planning to contribute the other $1500 for 2018 soon?

Are you planning to convert $2500 in 2019 because you are planning to contribute it in 2019 for 2019?
I suppose this will trigger a bigger tax.
Not if you do it right.
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BL
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Re: Traditional IRA rollover to 403b witholding amount

Post by BL »

I am confused about whether any of it was deductible (the word taxable is not clear), that is, you deducted the contribution from your 1040 taxes. If none of it was ever deducted (pre-tax), then you could convert it all to a Roth IRA and only pay tax on the gains you convert.

Be sure you understand it before you do something. Getting the terms right is very important. Maybe you have it but I am not sure.
Topic Author
Hanopol
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Re: Traditional IRA rollover to 403b witholding amount

Post by Hanopol »

Duckie wrote: Fri Nov 16, 2018 6:21 pm
Hanopol wrote:What will happen if I end up just converting part of the TIRA to ROTH (I still have $1500 space for 2018 for ROTH backdoor), then convert the rest about $2500 to 2019 ROTH?
You can make many conversions in a year. They'll be totaled into one number on the 1099-R. But don't convert anything until you have rolled the pre-tax portion to the 403b plan. There are no more do-overs. For safety the rollover has to happen first.

So you've already contributed $4000 for 2018? And you're planning to contribute the other $1500 for 2018 soon?

Are you planning to convert $2500 in 2019 because you are planning to contribute it in 2019 for 2019?
I suppose this will trigger a bigger tax.
Not if you do it right.
Yes, I have contributed $4000 for 2018 so far, to ROTH. I plan to convert $1500 from TIRA to ROTH in 2018. Also, yes, come Jan 2019, I plan to convert the rest which is $2300 for 2019. Thanks. Very helpful ideas. I am sorry to confuse everyone, if I can avoid a rollover, I would.
Topic Author
Hanopol
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Re: Traditional IRA rollover to 403b witholding amount

Post by Hanopol »

BL wrote: Fri Nov 16, 2018 6:25 pm I am confused about whether any of it was deductible (the word taxable is not clear), that is, you deducted the contribution from your 1040 taxes. If none of it was ever deducted (pre-tax), then you could convert it all to a Roth IRA and only pay tax on the gains you convert.

Be sure you understand it before you do something. Getting the terms right is very important. Maybe you have it but I am not sure.
Sorry for not being clear. The entire TIRA is non deductible. Just didn't know what part of the TIRA would need to be taxed if rolled over to 403b.
Thanks. Not doing a thing until I have a firm understanding of all this.
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retiredjg
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Re: Traditional IRA rollover to 403b witholding amount

Post by retiredjg »

If all your contributions were non-deductible, the IRA now contains non-deductible contributions and earnings from those contributions that have not yet been taxed.

The non-deductible part CANNOT be rolled to the 403b. The earnings , which are pre-tax, can be rolled to the 403b if the plan will accept them. That would be a non-taxable event and no withholding is needed.
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Duckie
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Re: Traditional IRA rollover to 403b witholding amount

Post by Duckie »

Hanopol wrote:Yes, I have contributed $4000 for 2018 so far, to ROTH.
I'm confused. Did you contribute the $4000 directly to the Roth IRA or did you contribute it to the TIRA and already converted it?
I plan to convert $1500 from TIRA to ROTH in 2018.
Why are you converting in pieces?
Also, yes, come Jan 2019, I plan to convert the rest which is $2300 for 2019.
Where did this $2300 come from? Is it already in the TIRA or do you plan to contribute it in 2019?
The entire TIRA is non deductible. Just didn't know what part of the TIRA would need to be taxed if rolled over to 403b.
If you roll the pre-tax amounts into your 403b there will be no taxes on the rollover. If you then convert the remainder of the TIRA to a Roth IRA there will be no taxes on the conversion of the basis and if there are a few dollars of gains that go along, a little bit of taxes on them.

For example, let's say you have a TIRA that has four years worth of contributions or $22,000 in basis and it's now worth $30,000. If you roll the $8,000 in earnings to the 403b and then convert to your Roth IRA the remainder of the TIRA which has now grown to $22,010 you would owe no taxes on the $8,000 rollover, no taxes on the $22,000 basis, and a little bit of taxes on the $10 growth.
Topic Author
Hanopol
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Re: Traditional IRA rollover to 403b witholding amount

Post by Hanopol »

Duckie wrote: Fri Nov 16, 2018 6:46 pm
Hanopol wrote:Yes, I have contributed $4000 for 2018 so far, to ROTH.
I'm confused. Did you contribute the $4000 directly to the Roth IRA or did you contribute it to the TIRA and already converted it?

Sorry for my poor description of the issue. I should have stated all this well in advance.
Starting in 2018, I have a non deductible TIRA with $4800 roughly. I also have a ROTH IRA both with Vanguard. I contributed $4000 to TIRA then converted it to ROTH in 2018, through backdoor. TIRA still with $4800 in it.
So I still have space for $1500 for 2018.
I plan to convert $1500 from TIRA to ROTH in 2018.
Why are you converting in pieces?

The $1500 is to fill up the space for 2018 to total $5500 for the year, as I have already contributed $4000.
Also, yes, come Jan 2019, I plan to convert the rest which is $2300 for 2019.
Where did this $2300 come from? Is it already in the TIRA or do you plan to contribute it in 2019?

Sorry typo :oops: , the amount should be $3300. Yes this is the amount left over from the $4800 minus the $1500 that's already in the TIRA. I plan to convert this $3300 from TIRA to ROTH for 2019come January, then add $2200 to fill up the space to total $5500.

The entire TIRA is non deductible. Just didn't know what part of the TIRA would need to be taxed if rolled over to 403b.
If you roll the pre-tax amounts into your 403b there will be no taxes on the rollover. If you then convert the remainder of the TIRA to a Roth IRA there will be no taxes on the conversion of the basis and if there are a few dollars of gains that go along, a little bit of taxes on them.

OK, got it. Thanks. Yes, very little growth on the TIRA. Is it OK to just do the conversions rather than go through the hassle of a rollover to 403b?

For example, let's say you have a TIRA that has four years worth of contributions or $22,000 in basis and it's now worth $30,000. If you roll the $8,000 in earnings to the 403b and then convert to your Roth IRA the remainder of the TIRA which has now grown to $22,010 you would owe no taxes on the $8,000 rollover, no taxes on the $22,000 basis, and a little bit of taxes on the $10 growth.
OK, understood. Thanks.
Topic Author
Hanopol
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Re: Traditional IRA rollover to 403b witholding amount

Post by Hanopol »

retiredjg wrote: Fri Nov 16, 2018 6:38 pm If all your contributions were non-deductible, the IRA now contains non-deductible contributions and earnings from those contributions that have not yet been taxed.

The non-deductible part CANNOT be rolled to the 403b. The earnings , which are pre-tax, can be rolled to the 403b if the plan will accept them. That would be a non-taxable event and no withholding is needed.
I, see. Thanks.
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Earl Lemongrab
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Re: Traditional IRA rollover to 403b witholding amount

Post by Earl Lemongrab »

It would be better if you listed exactly what you have contributed to TIRA, whether any of the contributions were pretax, and what the balance of all TIRA accounts is. The amount you have contributed to Roth IRA is irrelevant other than that affects how much you can contribute to a TIRA for this year.
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Duckie
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Re: Traditional IRA rollover to 403b witholding amount

Post by Duckie »

Hanopol wrote:Is it OK to just do the conversions rather than go through the hassle of a rollover to 403b?
You are allowed to convert the entire amount without rolling any pre-tax amounts over. It just means you'll pay taxes on all the pre-tax amounts that you convert. If those amounts are small and the tax-hit will be low, just converting them is probably the way to go.
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Hanopol
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Re: Traditional IRA rollover to 403b witholding amount

Post by Hanopol »

Duckie wrote: Sat Nov 17, 2018 5:31 pm
Hanopol wrote:Is it OK to just do the conversions rather than go through the hassle of a rollover to 403b?
You are allowed to convert the entire amount without rolling any pre-tax amounts over. It just means you'll pay taxes on all the pre-tax amounts that you convert. If those amounts are small and the tax-hit will be low, just converting them is probably the way to go.
OK, thanks for that. The pre-tax amounts are low, so I anticipate the tax will be just fine. The gains may just be a little over $300.
I will just convert the entire $4800 TIRA to ROTH on Jan 2019, then top off to the max allowable limit.
Thanks to all who have helped me. It saved me the time to do the whole roll over process. But most importantly, I appreciate what I have learned. :sharebeer
Topic Author
Hanopol
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Re: Traditional IRA rollover to 403b witholding amount

Post by Hanopol »

ofckrupke wrote: Fri Nov 16, 2018 5:29 pm
Hanopol wrote: Fri Nov 16, 2018 5:00 pm are there any other means to take this money out of my TIRA, short of doing a direct distribution?
It's only after-tax to the extent of its basis as calculated in the form 8606 for the most recent year any non-deductible rollover or contribution to, or conversion from, any IRA you own. That is, if you made one 5k non-deductible contribution at some point in the past and that grew tax deferred to 45k now, then the internal revenue code and regulations, and many employer plans, do permit rolling the not-previously-taxed 40k in.

But if the tax deferred growth above basis is relatively small, or the employer plan has more stringent requirements to roll in than required by law: then just Roth convert the whole thing along with your non-deductible 2018 contribution. If you can't cash flow the whole tax liability this year on the pre-tax part, then convert half, then the other half in early January; in this case delaying your 2018 contribution until 2019 will avoid pro rata dilution of the amount converted in 2018.
Thank you, ofckrupke. I will ROTH convert the whole amount in Jan 2019, which is $4800 for 2019 then top off to the maximum allowed limit. And yes, the growth is a relatively small amount. Not going to bother with the rollover. :sharebeer
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retiredjg
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Re: Traditional IRA rollover to 403b witholding amount

Post by retiredjg »

Hanopol wrote: Sat Nov 17, 2018 6:02 pm
Duckie wrote: Sat Nov 17, 2018 5:31 pm
Hanopol wrote:Is it OK to just do the conversions rather than go through the hassle of a rollover to 403b?
You are allowed to convert the entire amount without rolling any pre-tax amounts over. It just means you'll pay taxes on all the pre-tax amounts that you convert. If those amounts are small and the tax-hit will be low, just converting them is probably the way to go.
OK, thanks for that. The pre-tax amounts are low, so I anticipate the tax will be just fine. The gains may just be a little over $300.
I will just convert the entire $4800 TIRA to ROTH on Jan 2019, then top off to the max allowable limit.
Thanks to all who have helped me. It saved me the time to do the whole roll over process. But most importantly, I appreciate what I have learned. :sharebeer
I think you are still not understanding something. Or maybe I'm not understanding what you said.

A Roth conversion is not considered part of your $5,500 contribution limit. You can make your entire $5,500 contribution and still convert any amount of your IRA that you want. And you don't need to wait till 2019 if you don't want to.
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retiredjg
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Re: Traditional IRA rollover to 403b witholding amount

Post by retiredjg »

PS, I'm still a little concerned that you have not mentioned having filled out Form 8606 when you did your non-deductible contributions. You cannot do the Roth conversion without that documentation. Well, you can...but you would be paying tax on that money a second time.

You also mention that you are about to do a back door Roth contribution. There is something about your post (I can't put my finger on just what) that makes me think you don't understand that completely yet.

It is possible that I'm completely misunderstanding what you have said, but I thought it was worth mentioning, just in case.
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Prokofiev
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Re: Traditional IRA rollover to 403b witholding amount

Post by Prokofiev »

My question would be WHY you want to roll-over from Vanguard to the 403-b? Usually, you will have far less options and higher ERs in the 403b plan. Perhaps yours is different, but I don't see any advantage to this roll-over. Comments?
Everything should be made as simple as possible, but not simpler - Einstein
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BL
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Re: Traditional IRA rollover to 403b witholding amount

Post by BL »

I am thinking you have been reading too many posts about splitting up tIRA to 401k/403b and Roth IRA so it has gotten all jumbled up with Roth contributions.

First, you can contribute a maximum of 5500 to an IRA per year. Doesn't matter if it is Roth or traditional or both. Have you contributed a total of 5500 to IRAs for 2018? You have until next April to finish contributing. Contributions have nothing to do with converting.

Were all previous year contributions to your tIRA non-deductible? These would have been recorded on the 8606, or need to be if not done. If some were deducted then you have a mixture that might need splitting to 403b if tax is high. If none were deducted, just convert it all to Roth IRA and pay the tax on the gains. (If gains are a lot, then you might want to roll gains to a 403b.) Again, converting is not contributing! The 8606 will record all of this.
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Hanopol
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Re: Traditional IRA rollover to 403b witholding amount

Post by Hanopol »

BL wrote: Sun Nov 18, 2018 10:49 am I am thinking you have been reading too many posts about splitting up tIRA to 401k/403b and Roth IRA so it has gotten all jumbled up with Roth contributions.

First, you can contribute a maximum of 5500 to an IRA per year. Doesn't matter if it is Roth or traditional or both. Have you contributed a total of 5500 to IRAs for 2018? You have until next April to finish contributing. Contributions have nothing to do with converting.

Were all previous year contributions to your tIRA non-deductible? These would have been recorded on the 8606, or need to be if not done. If some were deducted then you have a mixture that might need splitting to 403b if tax is high. If none were deducted, just convert it all to Roth IRA and pay the tax on the gains. (If gains are a lot, then you might want to roll gains to a 403b.) Again, converting is not contributing! The 8606 will record all of this.
Thanks. No not splitting amounts over 403b, ROTH, TIRA. All contributions are non deductible. I have filed 8606 form using TT. I have contributed $4000 for 2018 so far. I'll top off to max before years end.
Well aware of the difference between contributing vs converting.
I'll convert the entire amount to ROTH in 2019. Thanks.
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Hanopol
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Re: Traditional IRA rollover to 403b witholding amount

Post by Hanopol »

Prokofiev wrote: Sun Nov 18, 2018 9:17 am My question would be WHY you want to roll-over from Vanguard to the 403-b? Usually, you will have far less options and higher ERs in the 403b plan. Perhaps yours is different, but I don't see any advantage to this roll-over. Comments?
Good question. My wrong assumption that all monies can be rolled over to 403b, so as to zero out my TIRA. The entire amount is after tax, so can't roll over anyway.
Thanks
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Hanopol
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Re: Traditional IRA rollover to 403b witholding amount

Post by Hanopol »

retiredjg wrote: Sun Nov 18, 2018 8:25 am
Hanopol wrote: Sat Nov 17, 2018 6:02 pm
Duckie wrote: Sat Nov 17, 2018 5:31 pm
Hanopol wrote:Is it OK to just do the conversions rather than go through the hassle of a rollover to 403b?
You are allowed to convert the entire amount without rolling any pre-tax amounts over. It just means you'll pay taxes on all the pre-tax amounts that you convert. If those amounts are small and the tax-hit will be low, just converting them is probably the way to go.
OK, thanks for that. The pre-tax amounts are low, so I anticipate the tax will be just fine. The gains may just be a little over $300.
I will just convert the entire $4800 TIRA to ROTH on Jan 2019, then top off to the max allowable limit.
Thanks to all who have helped me. It saved me the time to do the whole roll over process. But most importantly, I appreciate what I have learned. :sharebeer
I think you are still not understanding something. Or maybe I'm not understanding what you said.

A Roth conversion is not considered part of your $5,500 contribution limit. You can make your entire $5,500 contribution and still convert any amount of your IRA that you want. And you don't need to wait till 2019 if you don't want to.
Thanks, retiredjg.I appreciate the comment. I see, so I can convert this TIRA to ROTH this year and still put in 5500 also for this year?
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Hanopol
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Re: Traditional IRA rollover to 403b witholding amount

Post by Hanopol »

Hanopol wrote: Sun Nov 18, 2018 9:49 pm
BL wrote: Sun Nov 18, 2018 10:49 am I am thinking you have been reading too many posts about splitting up tIRA to 401k/403b and Roth IRA so it has gotten all jumbled up with Roth contributions.

First, you can contribute a maximum of 5500 to an IRA per year. Doesn't matter if it is Roth or traditional or both. Have you contributed a total of 5500 to IRAs for 2018? You have until next April to finish contributing. Contributions have nothing to do with converting.

Were all previous year contributions to your tIRA non-deductible? These would have been recorded on the 8606, or need to be if not done. If some were deducted then you have a mixture that might need splitting to 403b if tax is high. If none were deducted, just convert it all to Roth IRA and pay the tax on the gains. (If gains are a lot, then you might want to roll gains to a 403b.) Again, converting is not contributing! The 8606 will record all of this.
Thanks. No not splitting amounts over 403b, ROTH, TIRA. All contributions are non deductible. I have filed 8606 form using TT. I have contributed $4000 for 2018 so far. I'll top off to max before years end.
Well aware of the difference between contributing vs converting.
I'll convert the entire amount to ROTH in 2019. Thanks.
[/quote
Or as reiredgj mentioned, convert the TIRA to ROTH in 2018. and still contribute 5500 for 2018. If I'm understanding this correct l.
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retiredjg
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Re: Traditional IRA rollover to 403b witholding amount

Post by retiredjg »

Hanopol wrote: Sun Nov 18, 2018 10:01 pm
retiredjg wrote: Sun Nov 18, 2018 8:25 am
Hanopol wrote: Sat Nov 17, 2018 6:02 pm
Duckie wrote: Sat Nov 17, 2018 5:31 pm
Hanopol wrote:Is it OK to just do the conversions rather than go through the hassle of a rollover to 403b?
You are allowed to convert the entire amount without rolling any pre-tax amounts over. It just means you'll pay taxes on all the pre-tax amounts that you convert. If those amounts are small and the tax-hit will be low, just converting them is probably the way to go.
OK, thanks for that. The pre-tax amounts are low, so I anticipate the tax will be just fine. The gains may just be a little over $300.
I will just convert the entire $4800 TIRA to ROTH on Jan 2019, then top off to the max allowable limit.
Thanks to all who have helped me. It saved me the time to do the whole roll over process. But most importantly, I appreciate what I have learned. :sharebeer
I think you are still not understanding something. Or maybe I'm not understanding what you said.

A Roth conversion is not considered part of your $5,500 contribution limit. You can make your entire $5,500 contribution and still convert any amount of your IRA that you want. And you don't need to wait till 2019 if you don't want to.
Thanks, retiredjg.I appreciate the comment. I see, so I can convert this TIRA to ROTH this year and still put in 5500 also for this year?
Yes, but only if you have what I think you have. It appears to me that you have 2 IRAs.

The first IRA is about $4,800 and is mostly non-deductible contributions from previous years. You have Form 8606 documenting this. There is about $300 in earnings in this account. That $300 will be taxable.

The second IRA is about $4,000 and is for your 2018. These contributions are also non-deductible, but not yet documented on Form 8606.

If this is what you have, you can contribute another $1,500 for 2018 and convert both IRAs to Roth at the same time and you can do that this year.

If that is not what you have, please tell us exactly what you do have.
1TheGame
Posts: 53
Joined: Fri Apr 20, 2018 10:38 am

Re: Traditional IRA rollover to 403b witholding amount

Post by 1TheGame »

Prokofiev wrote: Sun Nov 18, 2018 9:17 am My question would be WHY you want to roll-over from Vanguard to the 403-b? Usually, you will have far less options and higher ERs in the 403b plan. Perhaps yours is different, but I don't see any advantage to this roll-over. Comments?
This may be unique to Maryland, not sure. Maryland has a "Pension Exclusion" in which the first ~30K/person of "retirement system income" plus SS is not subject to state income tax. Another twist is that the SS part is not taxed starting at 62; the "retirement system income" part is not taxed starting at age 65. "Retirement system income" includes pensions, 401k, 403b, but NOT traditional IRA withdrawals. So it would be beneficial to roll TIRA holdings into a 401k or 403b before withdrawing funds so as to qualify those withdrawals for the Pension Exclusion. I am planning on moving some TIRA funds to 403b in the future because of this.
Topic Author
Hanopol
Posts: 35
Joined: Mon Aug 10, 2015 9:20 am

Re: Traditional IRA rollover to 403b witholding amount

Post by Hanopol »

retiredjg wrote: Mon Nov 19, 2018 7:41 am
Hanopol wrote: Sun Nov 18, 2018 10:01 pm
retiredjg wrote: Sun Nov 18, 2018 8:25 am
Hanopol wrote: Sat Nov 17, 2018 6:02 pm
Duckie wrote: Sat Nov 17, 2018 5:31 pm
You are allowed to convert the entire amount without rolling any pre-tax amounts over. It just means you'll pay taxes on all the pre-tax amounts that you convert. If those amounts are small and the tax-hit will be low, just converting them is probably the way to go.
OK, thanks for that. The pre-tax amounts are low, so I anticipate the tax will be just fine. The gains may just be a little over $300.
I will just convert the entire $4800 TIRA to ROTH on Jan 2019, then top off to the max allowable limit.
Thanks to all who have helped me. It saved me the time to do the whole roll over process. But most importantly, I appreciate what I have learned. :sharebeer
I think you are still not understanding something. Or maybe I'm not understanding what you said.

A Roth conversion is not considered part of your $5,500 contribution limit. You can make your entire $5,500 contribution and still convert any amount of your IRA that you want. And you don't need to wait till 2019 if you don't want to.
Thanks, retiredjg.I appreciate the comment. I see, so I can convert this TIRA to ROTH this year and still put in 5500 also for this year?
Yes, but only if you have what I think you have. It appears to me that you have 2 IRAs.

The first IRA is about $4,800 and is mostly non-deductible contributions from previous years. You have Form 8606 documenting this. There is about $300 in earnings in this account. That $300 will be taxable.

The second IRA is about $4,000 and is for your 2018. These contributions are also non-deductible, but not yet documented on Form 8606.

If this is what you have, you can contribute another $1,500 for 2018 and convert both IRAs to Roth at the same time and you can do that this year.

If that is not what you have, please tell us exactly what you do have.
This is EXACTLY what I have. Sorry took a long conversation for me clarify this.
Point well taken to make $5000 IRA contribution and $4800 conversion all in 2018.
Yes, $4000 not yet recorded on form 8606 for 2018.
The $4800 amount is on form 8606.
Thanks
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