Help me! Backdoor Roth Strategy
Posted: Sat Nov 23, 2019 3:05 pm
Re-looking at this idea and am looking for advice as to if I am missing something or not interpreting the rules correctly:
Background:
Own small business (restaurant) with an existing SimpleIRA with 5 active employees participating.
Have an old Vanguard SEP-IRA that I would like to transfer into a Solo401k in order to participate in Backdoor Roth. Would like to continue with the SimpleIRA. But will transfer money out of it by year end.
Have another business that is passive.
Strategy 1:
Open a Fidelity Solo401k. Do not plan to contribute to it. But would like to roll SEP-IRA (Simple IRA money is rolled into SEP-IRA yearly) into it (will be over $250K). After a year or so, may rollover back to Vanguard as a SOLO 401k, or may not.
For the coming years will do a backdoor roth, since all traditional IRAs are in roths or 401k's.
To open account I could use my tax id for my other company.
Strategy 2:
Open a Guideline 401k with my small business and use for one year. Transfer all SEP-IRA money into it. Then participate in backdoor roth. At the end of year transfer to a Solo401k, and go back to doing a no cost SimpleIRA. Transfer money by the end of year to the Solo401k to continue using backdoor roth.
Prefer strategy 1, as to not have to open a guideline 401k. I do not like their auto enrollment that they require and the $1000 fee with 5 employees for the first year.
Any thoughts to either strategy?
Thanks in advance for your input!
Background:
Own small business (restaurant) with an existing SimpleIRA with 5 active employees participating.
Have an old Vanguard SEP-IRA that I would like to transfer into a Solo401k in order to participate in Backdoor Roth. Would like to continue with the SimpleIRA. But will transfer money out of it by year end.
Have another business that is passive.
Strategy 1:
Open a Fidelity Solo401k. Do not plan to contribute to it. But would like to roll SEP-IRA (Simple IRA money is rolled into SEP-IRA yearly) into it (will be over $250K). After a year or so, may rollover back to Vanguard as a SOLO 401k, or may not.
For the coming years will do a backdoor roth, since all traditional IRAs are in roths or 401k's.
To open account I could use my tax id for my other company.
Strategy 2:
Open a Guideline 401k with my small business and use for one year. Transfer all SEP-IRA money into it. Then participate in backdoor roth. At the end of year transfer to a Solo401k, and go back to doing a no cost SimpleIRA. Transfer money by the end of year to the Solo401k to continue using backdoor roth.
Prefer strategy 1, as to not have to open a guideline 401k. I do not like their auto enrollment that they require and the $1000 fee with 5 employees for the first year.
Any thoughts to either strategy?
Thanks in advance for your input!