401k to IRA conversion

[gregory r.]

Quick question; I had an older 401k that was converted to an IRA & rolled into my Vanguard accounts. These are all pretax dollars.

Can I still contribute to this same converted IRA using after tax funds?

I assume i would just need to track the cost basis of the non-deductible contributions? (we are over the earnings limit for tax deductible cont)

Any downside to this method aside from the self tracking of after tax contributions?

Thanks to all the providers of FIRE wisdom on this site....

 

[thefinancebuff]

Quick question; I had an older 401k that was converted to an IRA & rolled into my Vanguard accounts. These are all pretax dollars.

Can I still contribute to this same converted IRA using after tax funds?

You can, but it's better if you can "hide" it somewhere and then do backdoor Roth. That way the earnings on your after-tax contributions will be tax free.

 

[Choices]

As someone who just spent the weekend untangling the threads of old rollovers and after tax contribs, keep them separate. Your tired brain will thank you! You still have to apportion it come RMD time, I guess but I (usually) am in to simplicity.

 

[gregory r.]

thanks for quick thoughts!! I thought about the ROTH BD conversion but it's been sitting for 10 yrs with appreciable gains, and I'm 55 hoping to FIRE in 3 yrs at a lower tax rate. If I recall for the conversion i would have to pay income at today's rate on the whole nut?
Choices .....I would agree with you on the simplicity aspect. thanks

 

[Animorph]

If you're not converting to a Roth soon, and with an untaxed IRA that is probably likely, I'd keep it in a normal taxable account with a tax efficient allocation. An equity index fund would be fine. Then your gains are mostly long-term and not regular income. It all depends on your specific tax situation of course.