Question

ROTH IRA

Forum|Forum|3 years ago
April 6, 2023
1 reply
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Hi,

I plan to open a Roth IRA account and do back-door ROTH. I had a 401k/403b account with my previous employer before 2007. After 2007 my company got bought and I started working for my current company. Since then my previous 401k/403b account got transferred into a roll-over IRA at Wells Fargo Bank. For the purpose of back-door ROTH, I plan to transfer my roll-over IRA into my 403b account with my current employer at Fidelity. Does this process sound ok for tax purpose? Will I incur any tax through this transfer? Thank you!

O

Opus 17

Employee

Step 1: rollover all the IRA into a pre-tax 403b with your current employer and close that IRA.

Step 2: open a new IRA and make a non-deductible contribution of up to $6500 (or $7500 if over age 50).

Step 3: rollover the non-deductible IRA to a Roth IRA.

You will be fine. What you don't want to do is to have pre-tax money in an IRA at the same time as you add after-tax or nondeductible money. (Because all IRAs are considered 1 IRA for tax purposes, having pre-tax money in bank A at the same time as adding after-tax money to a different account at bank B could cause a problem.) As long as you get all the pre-tax money out of your IRA before you add the after-tax money, you will be ok.