Backdoor Roth (Pro-Rata?)

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Liberty1100
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Joined: Fri Nov 21, 2014 12:36 pm
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Backdoor Roth (Pro-Rata?)

Post by Liberty1100 »

I need some help understanding how or if I can execute a backdoor Roth conversion for 2019.

I was fortunate to have a great year and have an MAGI greater than the limit for direct Roth IRA contributions. I work full time (earned income >$12k and wife does not).

Wife:
- Traditional IRA: None
- Roth IRA: ~$20k, Not touches this year (2019).
- 401k: None

Myself:
- Traditional IRA: ~20k, not touched this year (2019).
- Roth IRA: ~$20k, not touched this year (2019).
- 401k: Contributed this year (2019).

1) Could I open a new traditional IRA account, contribute 6k as a non-deductible contribution, and then convert the IRA to a Roth IRA without applying the pro-rata rule and dealing with the 20k from my existing tIRA?

From what I understand, my wife can open a traditional IRA, contribute 6k as a non-deductible contribution, and then convert the IRA to a Roth IRA.
2) Is that the correct method?

3) Can she covert the new tIRA into her existing Roth IRA?

3.1) Is that a function of the broker? (Fidelity).
Spirit Rider
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Joined: Fri Mar 02, 2007 2:39 pm

Re: Backdoor Roth (Pro-Rata?)

Post by Spirit Rider »

No*, Yes, Yes and No.

*The total pre-tax balances of all traditional, SEP and SIMPLE IRA accounts on 12/31 of any year you do Roth conversions are included in any pro-rata calculation. Opening a new account achieves nothing.

However, if your 401k plan accepts IRA rollovers. You can rollover all pre-tax IRA balances to the 401k before doing the Roth conversion. Only the pre-tax balances on 12/31/2020 would matter for 2020 Roth conversions. Including a conversion of a 2019 non-deductible traditional IRA contribution.
Topic Author
Liberty1100
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Joined: Fri Nov 21, 2014 12:36 pm
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Re: Backdoor Roth (Pro-Rata?)

Post by Liberty1100 »

Okay. So the pro-rata rule only applies to me, and not my wife in this case, right?

(Married filing jointly, if that matters)
Alan S.
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Re: Backdoor Roth (Pro-Rata?)

Post by Alan S. »

Liberty1100 wrote: Tue Feb 18, 2020 10:24 am Okay. So the pro-rata rule only applies to me, and not my wife in this case, right?

(Married filing jointly, if that matters)
Correct.
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Eagle33
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Re: Backdoor Roth (Pro-Rata?)

Post by Eagle33 »

You only need to do a backdoor Roth if your 2019 MAGI for Roth is >$193k (phased out >$203k) for MFJ and can't do a direct Roth contribution.
Rocket science is not “rocket science” to a rocket scientist, just as personal finance is not “rocket science” to a Boglehead.
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