Roll over tIRA to existing Solo 401k (Roth prep)

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Topic Author
Oenophileangler
Posts: 10
Joined: Tue Sep 01, 2020 9:39 pm

Roll over tIRA to existing Solo 401k (Roth prep)

Post by Oenophileangler »

I have a traditional IRA started way back in 1983 with Vanguard. In 1983, I invested $1,000 (pre-tax obviously), and then did not contribute for 7 years (finances were poor). In 1990, I resumed contributing post-tax money to my IRA, until I got about $30k contributed (that's my basis). No other pre-tax money except that original $1k.

That original $1,000 was kept in the Windsor Fund (then in Equity Income) within the tIRA (it's now $60k; that's compounding!) and was never "commingled" with the Post-tax fund (Wellington). I have just over $30,000 basis in the Wellington Fund; $240,000 total in Wellington. So 60 + 240, or $300k in the entire IRA.

I just retired (from a company where I got a W-2 and 401k) in early 2020, but did some part time work on my own in 2020. I started a solo 401k at Vanguard and contributed a small amount on the profit sharing side).

I understand that now Vanguard solo 401k's will accept incoming IRA rollovers, so I will contact Vanguard to change plan documents to allow this.

I will have a tax planning window coming up, starting in 2023, to allow for moderate Roth conversions. I will have large RMD's from my 401k starting in 2029 when I turn 72, as well as SS and large pensions which I'll defer until 70. So, I'm certain that my taxes will be substantially larger post-age-72 than during the window.

I know this is a lot of information, but it provides the background for my question. On one of my tax planning years, I plan to convert my IRA to a Roth. On another of these years, I will convert my wife's tIRA ($300k with $95k basis). The other years will convert some of our 401k / 403b money to Roth IRA's.

I would like to know if this is ok: Rolling $60k (from my original pre-tax fund) to my solo 401k. Also, rolling over 240 minus 30, or $210,000 (my gains on post tax money) to my solo 401k. Then I would "Roth convert" $30k from my tIRA and a bigger amount from my 401k in the same year.

My wife has no access to an account which allows IRA rollovers (it's a Fidelity 403b and Fidelity 401k from her work), so she'll convert her entire tIRA on one of those years, and we'll pay taxes on about $205,000.
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FiveK
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Joined: Sun Mar 16, 2014 2:43 pm

Re: Roll over tIRA to existing Solo 401k (Roth prep)

Post by FiveK »

Oenophileangler wrote: Mon May 03, 2021 10:26 pmIn 1990, I resumed contributing post-tax money to my IRA, until I got about $30k contributed (that's my basis).
Do you have your forms 8606 from those years (or at least the last year you made a post-tax contribution)?
I would like to know if this is ok: Rolling $60k (from my original pre-tax fund) to my solo 401k. Also, rolling over 240 minus 30, or $210,000 (my gains on post tax money) to my solo 401k. Then I would "Roth convert" $30k from my tIRA and a bigger amount from my 401k in the same year.
Yes.

Alternatively, as you plan to convert it all within a short time, you could just convert from the traditional IRA to a Roth IRA and pay tax only on the pre-tax fraction converted each year.
placeholder
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Joined: Tue Aug 06, 2013 12:43 pm

Re: Roll over tIRA to existing Solo 401k (Roth prep)

Post by placeholder »

That original $1,000 was kept in the Windsor Fund (then in Equity Income) within the tIRA (it's now $60k; that's compounding!) and was never "commingled" with the Post-tax fund (Wellington).
This is irrelevant because tax law considers you to have just one traditional ira regardless of the number of accounts or funds.
Topic Author
Oenophileangler
Posts: 10
Joined: Tue Sep 01, 2020 9:39 pm

Re: Roll over tIRA to existing Solo 401k (Roth prep)

Post by Oenophileangler »

FiveK wrote: Mon May 03, 2021 10:54 pm Do you have your forms 8606 from those years (or at least the last year you made a post-tax contribution)?
I'm on top of that:

viewtopic.php?f=1&t=347342&p=5973205#p5973205

Thanks.
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