Hi All,
I'm really struggling with the thought that I could be putting money in my Roth IRA via the back door method, but I have pre-tax money sitting in my traditional IRA, that is getting in the way. Here is my situation:
-Earning to much to contribute to a Roth via the conventional method.
-Have approximately 130K (pre-tax) in investments in my traditional IRA (rolled in from previous employer 401k)
-Have approximately 32K in investments in my Roth IRA (contributed before I exceeded the limit)
-Have a employer sponsored 401K with approximately 180K (pre-tax) in investments (contributing regularly and maxing out).
I COULD possibly move all the money from my traditional IRA into my employers 401K. I checked and the plan does allow in-service roll-in's. This would free up my tax liability and could do a 5,500 non-deductible contribution, then some time later do the conversion to my Roth IRA. I guess the downside there is that I'm stuck with the money in my 401K, with limited investment options...maybe I'm over thinking this. What do you think?
I also heard from another user here, Exit 2024, that I could setup a "business" as a Sole Proprietor and COULD open a solo 401K with Fidelity and transfer the Traditional IRA into that account. This would require one extra income tax form every year (schedule C), but not a really big deal. Am I any better off doing that vs. moving the money into my company's 401K plan? If not, then why would I do this vs. just rolling into company 401k?
I generally like having the traditional IRA only because I can execute my 3 fund strategy (VTI, VEU, BND) in conjunction with my individual account (not mentioned above) and my Roth IRA. But, my 401K is actually outperforming my individual, Roth IRA, and Traditional IRA. I guess the other thing to realize is that when I retire or quit my job I COULD move the money from my 401K to a Traditional IRA, if I REALLY didn't like the 401k. So, there is an out I suppose...
Again, maybe I'm overthinking it and should just move the money to my employer 401K so I have access to the backdoor Roth every year and can take advantage of tax-free gains...
Your help and thoughts are much appreciated....
I'm really struggling with the thought that I could be putting money in my Roth IRA via the back door method, but I have pre-tax money sitting in my traditional IRA, that is getting in the way. Here is my situation:
-Earning to much to contribute to a Roth via the conventional method.
-Have approximately 130K (pre-tax) in investments in my traditional IRA (rolled in from previous employer 401k)
-Have approximately 32K in investments in my Roth IRA (contributed before I exceeded the limit)
-Have a employer sponsored 401K with approximately 180K (pre-tax) in investments (contributing regularly and maxing out).
I COULD possibly move all the money from my traditional IRA into my employers 401K. I checked and the plan does allow in-service roll-in's. This would free up my tax liability and could do a 5,500 non-deductible contribution, then some time later do the conversion to my Roth IRA. I guess the downside there is that I'm stuck with the money in my 401K, with limited investment options...maybe I'm over thinking this. What do you think?
I also heard from another user here, Exit 2024, that I could setup a "business" as a Sole Proprietor and COULD open a solo 401K with Fidelity and transfer the Traditional IRA into that account. This would require one extra income tax form every year (schedule C), but not a really big deal. Am I any better off doing that vs. moving the money into my company's 401K plan? If not, then why would I do this vs. just rolling into company 401k?
I generally like having the traditional IRA only because I can execute my 3 fund strategy (VTI, VEU, BND) in conjunction with my individual account (not mentioned above) and my Roth IRA. But, my 401K is actually outperforming my individual, Roth IRA, and Traditional IRA. I guess the other thing to realize is that when I retire or quit my job I COULD move the money from my 401K to a Traditional IRA, if I REALLY didn't like the 401k. So, there is an out I suppose...
Again, maybe I'm overthinking it and should just move the money to my employer 401K so I have access to the backdoor Roth every year and can take advantage of tax-free gains...
Your help and thoughts are much appreciated....