Roth Conversion Options/Questions

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bogletay
Posts: 27
Joined: Tue Nov 10, 2020 1:57 pm

Roth Conversion Options/Questions

Post by bogletay »

Hi Bogleheads! We are looking at options to do additional Roth conversions this year and I wanted to ask this group a few questions to inform the way we approach it.

1) Traditional IRA to Roth IRA: Current traditional IRA has $0 in it. We have already done the $6K backdoor Roth conversion (income too high to contribute to Roth directly). I assume we cannot just deposit more after-tax money into a traditional IRA and convert within a day or so? Or can we? Is $6K the limit?
2) After Tax 401K: I participate in the mega-backdoor Roth via my employer and have maxed the contribution for the year. I have it set up so the funds automatically convert into a Roth 401K - do I need to convert it again into a Roth IRA? Or is it fine sitting in the Roth 401K portion?
3) What other options do we have for Roth conversions of either 401K (pre-tax portion) or post tax dollars?

Thank you!
livesoft
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Re: Roth Conversion Options/Questions

Post by livesoft »

You use the word "we", so I will assume you might be married filing jointly. $6,000 is the limit for an individual, so if there is a 2nd individual, then they can do their own $6,000, though it could be $7,000 if they are old enough for that limit.
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Topic Author
bogletay
Posts: 27
Joined: Tue Nov 10, 2020 1:57 pm

Re: Roth Conversion Options/Questions

Post by bogletay »

livesoft wrote: Sun Dec 05, 2021 6:41 am You use the word "we", so I will assume you might be married filing jointly. $6,000 is the limit for an individual, so if there is a 2nd individual, then they can do their own $6,000, though it could be $7,000 if they are old enough for that limit.
Yes, sorry - I should have said we each have done that!
Silk McCue
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Re: Roth Conversion Options/Questions

Post by Silk McCue »

Moving funds from a Roth 401k to a Roth IRA is not a conversion but simply a Rollover. They are just different vehicles to hold Roth funds.

Cheers
Topic Author
bogletay
Posts: 27
Joined: Tue Nov 10, 2020 1:57 pm

Re: Roth Conversion Options/Questions

Post by bogletay »

Silk McCue wrote: Sun Dec 05, 2021 6:49 am Moving funds from a Roth 401k to a Roth IRA is not a conversion but simply a Rollover. They are just different vehicles to hold Roth funds.

Cheers
Thank you! So I assume fine to leave sitting in the Roth 401K then?
dknightd
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Re: Roth Conversion Options/Questions

Post by dknightd »

bogletay wrote: Sun Dec 05, 2021 6:53 am Thank you! So I assume fine to leave sitting in the Roth 401K then?
You should be fine. I have some Roth 403b money (similar to Roth 401k). I do plan to move to Roth IRA before I'm subject to RMD (RMD are required from Roth 403b, but not Roth IRA)
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retiredjg
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Re: Roth Conversion Options/Questions

Post by retiredjg »

bogletay wrote: Sun Dec 05, 2021 6:35 am 1) Traditional IRA to Roth IRA: Current traditional IRA has $0 in it. We have already done the $6K backdoor Roth conversion (income too high to contribute to Roth directly). I assume we cannot just deposit more after-tax money into a traditional IRA and convert within a day or so? Or can we? Is $6K the limit?
You are done. $6k is the limit unless you are over 50.

2) After Tax 401K: I participate in the mega-backdoor Roth via my employer and have maxed the contribution for the year. I have it set up so the funds automatically convert into a Roth 401K - do I need to convert it again into a Roth IRA? Or is it fine sitting in the Roth 401K portion?
It is fine sitting in the Roth 401k...unless your 401k is not a good one...in which case you might see if they will allow you to roll it out to your Roth IRA.

3) What other options do we have for Roth conversions of either 401K (pre-tax portion) or post tax dollars?
You cannot take out your contributions to a current 401k (without a hardship exception). But, the law allows (and your plan might allow) you to take out rollovers and the employer match. You might see if any of that money is available.

On the other hand, chances are it would be better not to do any of that since since you are not in a lower tax bracket.
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