Backdoor Roth

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Topic Author
ACJC
Posts: 80
Joined: Wed Sep 27, 2017 1:13 am

Backdoor Roth

Post by ACJC »

So what if you completed a backdoor Roth at the beginning of the year but you actually made less money than you thought you were going to? Is there tax implications? A way to reverse it?

Thank you šŸ˜Š
2cents2
Posts: 470
Joined: Sun Mar 02, 2014 11:31 am

Re: Backdoor Roth

Post by 2cents2 »

Trying to clarify what you mean by this: "you actually made less money than you thought you were going to",

Did you contribute more than you earned to a Roth? Or, do you mean you were were still eligible to make a direct contribution to a Roth?
chambers136
Posts: 266
Joined: Tue Feb 28, 2017 9:49 am

Re: Backdoor Roth

Post by chambers136 »

If you mean that you thought you were going to reach the phase out income limit that prevents a direct Roth contribution, but didnā€™t quite make enough and actually could have done a direct contribution, from what I understand you can still perform the backdoor Roth procedure without any penalties
mark1623
Posts: 93
Joined: Mon Jan 14, 2019 2:33 pm

Re: Backdoor Roth

Post by mark1623 »

Any gains would have been subject to taxes in a traditional IRA. Since they took place in the Roth, those gains are tax-free if not taken until retirement. Don't worry about the returns over one year.

Also, no, you no longer can recharacterize (i.e. reverse) a Roth conversion once the end of the year has passed.
Topic Author
ACJC
Posts: 80
Joined: Wed Sep 27, 2017 1:13 am

Re: Backdoor Roth

Post by ACJC »

We file married and did 2 backdoor Rothā€™s at the beginning of the year because we thought we would make more than 199,000 jointly but we actually made less money?
fposte
Posts: 1792
Joined: Mon Sep 02, 2013 1:32 pm

Re: Backdoor Roth

Post by fposte »

That's okay. You're eligible to do a Roth conversion anyway. I do a backdoor Roth at the start of the year because my income tends to hover around the limit, and if I do a backdoor I can just contribute right away without waiting to see what my income is so I'm good either way.
Topic Author
ACJC
Posts: 80
Joined: Wed Sep 27, 2017 1:13 am

Re: Backdoor Roth

Post by ACJC »

Perfect! Thank you šŸ˜Š Itā€™s better to safe then :)
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PhysicianOnFIRE
Posts: 465
Joined: Fri Jan 08, 2016 3:46 pm
Location: Up North

Re: Backdoor Roth

Post by PhysicianOnFIRE »

Not a problem at all.

Everyone can do the backdoor Roth regardless of income (as long as you have the $6,000 in earned income, anyway). If you end up earning less than anticipated and don't have income in or above the phaseout range, the only downside is that you could have saved a step and contributed directly.

:beer
-PoF
Topic Author
ACJC
Posts: 80
Joined: Wed Sep 27, 2017 1:13 am

Re: Backdoor Roth

Post by ACJC »

Awesome!! And you just made my day!! I love your blog and follow you!!! And because of your blog we contributed to Roth for the first time!! And maxed out 401ks! Thank you!! :beer
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