and hence I had closed my existing traditional/rollover IRA accounts in that process. Since then I only have taxable, 401K and ROTH IRA accounts.If you can transfer your pre-tax IRA funds to a solo 401(k), employer-sponsored 401k, or 403(b), then they will no longer be subject to taxation during the Roth conversion process.
In the tax year 2019, my employer offered me choice of contributing to after-tax 401K, and hence it opened the choice of doing "Mega Backdoor ROTH IRA".
In Dec 2019, I did after-tax 401K to ROTH conversion. At the time of conversion, I had only $50 gains. I decided to pay taxes on the $50; and transferred all the after-tax 401K money to ROTH.
Now I am looking to repeat the same procedure for this year. However this time I have $2.5K of gains on the basis of $19.5K. I realized that my plan allows me to roll over the gains to rollover IRA account (and basis to ROTH). This will help me avoid taxes on $2.5K in this tax year.
1. Given that I had closed my rollover IRA accounts in 2018 to do backdoor ROTH, is it ok to re-open them now? Or will it open a can of worms?
2. If (1) is ok to do, should I do it? Or is it better to pay taxes now; and have all the money grow tax-free in ROTH?