Vanguard Backdoor Roth IRA 2022 | Step By Step Guide
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- Опубликовано: 6 авг 2024
- In this video, I walk you through the Vanguard backdoor Roth IRA contribution process for tax year 2022. This is a great way to save money on your taxes and grow your retirement savings. The contribution process can be a little confusing, but I break it down step-by-step in this video so that you can make the most of it.
Timecodes:
0:00 - Intro
1:28 - Backdoor Roth IRA 101
3:33 - Step by Step Walkthrough
8:02 - Most Common Backdoor Roth IRA Errors To Avoid
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DISCLAIMER: I am not a financial adviser. These videos are for educational and entertainment purposes only. I am merely sharing my personal opinion. Please seek professional help when needed.
As a CPA with 10+ years of tax experience, all I can say is that this is the most informative and easy-to-follow tutorial that I've ever seen. You did a great job using the correct terminology, which I appreciate from a tax perspective. You just received a new subscriber.
I contributed to 2022 ROTH in January of 2022 and those investments are now in loss. Now I’ve realized that I’m not eligible to contribute to 2022 ROTH due to my income. Instead of selling investments at loss and withdrawing $6k with loss, can I fund ROTH via back door and withdraw $6k immediately?
Not mentioning the Pro-Rata Rule seems to be a big oversight.
@@tallfescue THIS!!!!!
@@TomPortentoso THIS!!!! x2!!!! @Joshua Wustman As a CPA with 10+ years of tax experience, did you not find the fact that the video did not mention the Pro-Rata Rule a HUGE oversight. There might be 100's of people doing this strategy based on this well done video (with one big glaring omission) and they've opened a big can of worms.
I believe this video is very misleading. Try and avoid taxes and you’ll get busted. There’s no winning with the IRS.
Finally a perfect, well explained video on backdoor Roth IRA!
Thanks! Just did a backdoor Roth for my wife and I. I used this video last year and this year too. See you next year!
This video is so helpful. Thank you, and great work!
Wow great information that I can understand now Tae. Thank you. I have seen so many video's and it was not making complete sense.
Warning! There is a big potential problem that was (alarmingly) not mentioned in this video: If you already have other IRA balances (perhaps from a rolled-over 401(k), etc), then the back-door Roth conversion will not be a tax-free event! The reason is that when doing a conversion, a formula exists that figures what the converted balance is as a percentage of all "conversion-eligible" IRAs (this included SEP-IRAs) . So for instance if you are converting a $7k IRA balance, but have a $100k traditional or SEP-IRA, then you may only avoid taxation on 6.54% of the converted amount ($7k divided into $107k). Please speak with an actual practicing, experienced CPA before attempting your conversion.
@@brandonstockton7852 Q 1&2. Yes you can contribute to traditional IRA and then *back door* Roth IRA process is still an option but you owe *pro rata* tax since you have traditional IRA balance from prior years.
Q3&4. Moving your traditional IRA to your 401(k) creates 'fresh slate' to perform _tax free_ back door Roth process but only worth doing as long as your 401(k) allows it and offers good investments choices at low fees and low expense ratios.
Hi question, Can I rollover my 403b Roth to my ROTH IRA eventhough the chances that my MAGI will exceed this year's limit are really high. Is rollover considered as contribution? Thank you.
@@jobellecalicdan8341 Is that 403(b) with your past or current employer?
@@alrocky It's from my past employer. I was told I can only convert it to Roth IRA since its a Roth 403b. However, I'm afraid that I might exceed the income limit this year for the ROTH IRA.
@@jobellecalicdan8341 You're okay. Rolling old Roth 403(b) to Roth IRA has no impact on your ability to contribute to your 2023 Roth IRA.
Thank you this is the best video I have seen on this topic
Thanks so much. This was super helpful. Your channel is awesome.
Excellent presentation. Excellent instruction.
Thank you this helped me so much!!! Great info
This is great, very helpful, thank you. 5:18 Step-2, non-deductible IRA contribution. 6:27 Step-4, convert to Roth-Ira.
Thanks man! Needed that one
Hey Tae, this was great help. Thanks!
Glad it was helpful!
Super easy to follow, thank you!
Thanks for this video. Can you please expand this video to discuss the pro rata rule?
Gr8 Video Tae. Always appreciate your continued guidance on everything from a financial planning standpoint. I'd love to hear your thoughts on doing the exact same thing what you have mentioned here in the video with Robinhood instead of Vanguard. Robinhood is offering 3% match for this right now until end of Apr and that is appearing as immediate 3% bonus for a lot of people. but there could be some trade offs (fee wise, investment choices wise etc.). So we'd love to hear you make a video on the whole new robinhood IRA scheme and if that makes sense to you and would you recommend that to your viewers.
great video!
Can you do a video converting the money in a regular 401k to a Roth IRA. Really enjoying the videos, you do great at breaking it down for the layman.
The most easy way is to work with the company that is holding your 401k such as Vanguard or Fidelity.
It’s easy to open up an IRA or Roth IRA.
Once the accounts are set up it’s pretty easy to transfer and you can always ask them for advice.
Be careful when performing Roth conversions. Make sure to make estimated tax payments to IRS ahead of time. Have some after tax money saved up to pay the taxes.
You can always withdraw some from 401k too but again be careful about taxes being paid timely.
Great content 😁
Thanks 😁
Thanks for the detailed explanation Tae! Would it be possible to buy Individual stocks within the backdoor Roth IRA account?
Thank you for this detailed tutorial. I just finished the conversion process and chose 'no tax notice to be sent'. But now I am wondering if the traditional IRA gains interest during the process of conversion, how do I deal with the accumulated interest? Do I have to then convert those few dollars separately again and choose 'Tax to be withheld" as it is now taxable??? Need advice or a step by step video about any left overs after converting the non deductible tax dollars into ROTH please .(VANGARD)
Hello and Thank you very much for the very informative presentation. I am now subscribed to your channel and I hope to learn even more. I was wondering whether I could re-characterize a quantity that I’d previously ré-characterize? I mistakenly did the first in an attempt to convert a Traditional IRA into a Roth IRA. The custodian is telling me I cannot do so but however I’m not seeing any IRS guidance saying that. I see guidelines stating that reversing a conversion is prohibited but nothing stating a re-characterization isn’t reversible. I’m attempting to do this before the tax window closes. Any help greatly appreciated!
awesome bro
I am 100% Vanguard using TurboTax and want to understand if a Backdoor Roth Conversion (BRC) is a separate concept and/or process than a yearly Trad=>Roth Conversion ( TRC). I've bee doing large TRCs for the past 4 years (no BRCs). From this video, BCR appears to fall under the umbrella of TRC conversions. Would love to know if that's correct. Just wondering if I can save some tax money by doing both BRC & TRC - Thanks, everyone.
Great video! What is the pro-rata rule? if i have a simple ira account with my employer, can i still do this backdoor ira on a separate vangaurd account?
Do you need to make new accounts every year or can you use the same accounts for the 2023 contribution as well?
When we converting between Roth and traditional any open positions are sold off and the money is placed in the destination account as money market funds. If the market is below our cost basis on those positions when we convert we're taking a loss, and since it's not a taxable account, a loss that we cannot tax loss harvest. Am I correct in my understanding?
Good video but one question - if I already have a Trad IRA established with funds, and assuming it only has deductible contributions in it, when I go to convert the new contribution I just made for 2023, how will Vanguard know to only convert those dollars? Its easy if the TIRA is brand new and empty because every moves over to the Roth, but if its already got money in it is the question.
Has anything changed for 2023? Do these general steps work for other brokerages companies? Would rather not have to manage another login...
Do you HAVE to open a new Roth IRA for this to work? I already have one but may need to start the “back door” method as I may be over the income limit in 2023. Can I just create a new traditional IRA account and convert it to my current ROTH IRA for 2023?
My current ROTH IRA is already funded for 2022 and earnings should be below the married limit for 2022.
Do you have any advise on tax advantages / dis-advantages of being married? I am engaged and we are trying to figure out if we want to just "metaphorically" tie the knot, or do it for real.
Could you do 2023 version? Vanguard have updated their website so slightly.
Does converting from a tradional to a Roth CHANGE RMD.? I would have to assume yes?
I have viewed countless videos about the backdoor Roth IRA but no one explained it to me in a more simplified and easier way. Thanks so much.
Just a question - can I do this backdoor contribution each year when I am ready to put a lump sum amount in Roth IRA?
Great simple explanation! If I may ask, for common mistake #2 "Trickle in the contribution" does this also apply to dollar cost averaging into a fund? So, let's assume I have my 6k in my account. Do I have to use up all the buying power at once, or can I average my buys over the year?
you are able to average your buys over the year.
I have a traditional ira which has money invested. I opened earlier in 2022 and the portfolio is down. Can I covert this to back door Roth IRA now as I exceed income for direct Roth?Do I need to sell positions? Do I need to keep the traditional ira at $0? Is it better to leave the positions as is and transfer new 6000 and immediately convert to Roth? Thanks!
If my MAGI puts me into the "phase out" contributions for a ROTH, should I complete 100% of my contributions "$6000) into a Traditional and then complete the Backdoor method OR is there any advantage to make my phase out contribution to the ROTH and then make up the difference to get to $6000 using the backdoor method?
I want to make sure I understand this correctly. I have been contributing to my ROTH IRA ( In Vanguard ) for the last 7 years. In 2023 i have surpassed the income limit as an individual to contribute to my existing ROTH IRA. I can just open a traditional IRA ( In Vanguard ), deposit the 2023 allowable maximum for a ROTH IRA, wait for the money to clear and do a conversion into my EXISTING ROTH IRA? If this is true, I can do this every year going forward???
With vanguard, can you merge funds from the new normal IRA into an EXISTING Roth IRA?
Thank you for the video! Didn’t know about the 8606.
Question- what do you consider to be “trickling” in your contribution?
I have my contribution in my roth automated so I don’t have to think about it. But you’re saying dropping in a greater lump sum less frequently is better? In what ways?
If you are below the income limits and can contribute to a Roth IRA directly then what you doing is perfect!
The reason for contributing all at once for the back door Roth is to simplify your tax filing. When converting non-deductible contributions to Roth IRA, gains that occur in the IRA are taxable when converted. So making a contribution then quickly converting them to the Roth minimizes these gains.
I noticed you said to invest in longterm index funds which is the same that you recommend to do in brokerage accounts. But what are your thoughts on using dividend funds or high yield bonds to benefit from the compounding?
The number shows a pic of a black woman is that you?
Hello! Any idea what the best route is whether to withdraw my 401k from my previous employer? Or rollover to a traditional IRA? Or rollover to a roth IRA?
I want to take advantage of this backdoor perk. Thanks!
What vanguard fund do you recommend for a Roth?
Is there a way to automate $500/month from my bank to traditional ira? do i then have to wait to convert it to my roth as a lump sum and then invest into an index fund?
I have a small business and have a SIMPLE IRA for myself and my employees. Am I ok at setting up maxing out a backdoor Roth?
Thanks for this, very helpful! Question: To repeat the contribution each year, would I follow these same steps? i.e., fund the lump sum to the IRA account and immediately transfer (once settled) to the Roth, although it already has a balance?
Are over the income limit for direct contribution to Roth IRA? To speed process with your IRA custodian, open a taxable account along with traditional IRA and Roth IRA. Deposit at least $6,500 in your taxable account and come January transfer $6,500 to your traditional IRA. Since the $6,500 in taxable account should've settled long ago, it should have minimal settling time once you transfer it to traditional IRA.
Q1 Yes
Tae, I'm interested in setting up a backdoor Roth IRA. The steps have changed a bit on the Vanguard website. I'm assuming the first account I need to open is the TRADITIONAL IRA? Or should I pick ROTH IRA?
Same rules apply for 2023 ? As far as opening a back door wit no income limits ?
Is there a limit on how much you can convert? If there is no limit, can I do this to add on to my existing ROTH IRA that’s already at the $6000 limit with my income that’s lower than the limit for a front door IRA? (Sorry hope my question makes sense 😅)
Thank you for your helpful content. One question. If you follow your process, but convert to an existing Roth IRA account (instead of opening a new one like you show in Step 3), does that create any problems with the backdoor process?
No it does not cause any problems. Now, if you had an existing Traditional IRA with money in it that you wanted to convert to a Roth IRA that would cause problems due to the pro-rata rule.
I just rolled over my 403B roth to my roth IRA. Can I still do backdoor Roth IRA? Does rollover affects my ability to do backdoor? Thank you
What tax documents should be expected?
What if I have money in a Vanguard rollover IRA? If I plunk in $6500 into that rollover IRA, and then convert the whole thing (including the money already there), won't it end up mixing up pretax funds with this posttax $6500 and cause me a tax headache?
Great video! What would one do if they have already contributed to their Roth IRA but in the middle of the year their income increased? Do we still apply the same steps?
Yes, but you need to recharacterize your Roth IRA contribution as a non-deductible IRA first. You may need to pay taxes any earnings from Roth IRA
wow crazy how much the website has changed. cant do a lot of this
followed this video and did my first roth conversion last year. However, this year I'm getting the "Exchanging money between these accounts isn't permitted. (71019)" error when doing the same step. Anyone has insight as to what issue I'm running into?
Does vanguard allow self managed traditional IRA accounts? i have been asked to convert that to a broker managed account for some reason. Not sure why you are not getting that prompt when you opened your account in the demo.
Hello Tae Kim, Thank you for well explained backdoor Roth IRA stategy. Every year I maxout my 401K contribution in employer provided plan. Can I still make contribution to another Traditional IRA account and use backdoor stategy to fund my Roth IRA?
Yes you can
Ty for this video! After fully funding the Roth IRA using Backdoor method, would you recommend then funding the traditional Ira even though it would be non deductible? If so, how does that effect the following years Backdoor contribution?
Hi. The combined annual contribution limit for Roth and Traditional IRA is $6,000. So if you maxed out your Roth IRA, you technically can't fund the traditional IRA until the following year. Once you've maxed out your IRA, you should look to max out your other accounts like 401(k) and HSA if you have one.
Question i am collecting social security i dont have to file taxes does this qualify me to start a ira and a roth? I am confused. 73 and retirwd single too.
Can do the back door every year?
is the eligibility requirement based on the "possible" magi for 2023 to contribute to a 2023 roth ira account? Or a previous tax year. TIA!
I have both a traditional IRA and a Roth IRA with money already invested can in both do i need to sell my ETFS before i can roll it over? Pls let me know.
Thanks in advance
Is there any time restrictions on the backdoor Roth conversion? Could I create the traditional IRA account, trickle in contributions to that IRA throughout the year, and then at the end of the year, convert to a Backdoor Roth? Or would that also create complexity with taxes the following year?
Q1 No but the longer you wait the more likely contribution will generate dividends or otherwise increase in value thus creating a tax headache.
Q2 Yes
Q3 Yes
Can you talk about mega back door Roth IRAs?
Can I convert 6500 to my Roth IRA with this method and then trickle in 6500 to my traditional IRA, then once the new year starts then convert that to the ROTH IRA? or should I just convert straight from my money market account?
@ 8:02 Common Mistakes & Caveats: No mention of *pro rata* tax for those with existing traditional IRA from previous years.
I have an existing SEP IRA but if I open a traditional IRA just for the conversation, pro rata doesn't kick in right?
@@tekc0der Q1 Yes it does kick in. SEP IRA is included as calculation for pro rata: see Prana Wealth "Don’t Make These 2 Backdoor Roth IRA Mistakes" @ 1 minute 40 second mark
I am married and we already have a Roth IRA established with Vanguard. If I end up getting raises overtime with work and end up making over that amount, am I no longer allowed to contribute monthly and just have to sit with whatever the account balance is? In addition to the small Roth IRA account with Vanguard I also have a typical 401(k)/Roth 401(k) with my employer. Your help in this is greatly appreciated.
Yes. Your annual income determines if you can or cannot contribute to a Roth IRA. So when your income is below the IRS limit, you can contribute monthly without any complication. But once you make over the limit, you would want to use the Backdoor Roth IRA method and contributing monthly will just make the process more complicated. It's better to do it one lump sum when doing the Backdoor Roth IRA.
@ *Jack G* "am I no longer allowed to contribute monthly and just have to sit with whatever the account balance is?" Why don't you *_recharacterize_* that Roth IRA as a traditional IRA and then contribute full $6,000 to that t-IRA and then convert that $6,000 t-IRA to $6,000 Roth IRA?
I make commission and may make too much for a traditional IRA one year and then the next I can make under the limit. Can I make this all go into the same IRA?
What if I already opened a Roth IRA with one small deposit and now I have a salary increase that puts me above the income ceiling? How does the backdoor work with an existing Roth IRA and contribution?
If i put money into a traditional ira that I have deducted from my taxes, will I have to pay taxes ( when it's converted or when I take it out at retirement ) when I convert it into a Roth ira as if I never used a traditional ira?
I just opened a roth IRA and contributed $3000 to the money market account but did not buy any investments yet. I expect my MAGI to be over $150000 this coming year. Should i convert the $3000 back into my bank account, open a traditional IRA, and then convert it to my current ROTH IRA now?
Great informative video. Question - Once I convert from traditional to Roth - should I close out my Traditional IRA account? What would be the step afterward?
If you want to do it again next year, keep the traditional.
Does it mean, I will always be funding the traditional IRA then convert?
You should mention the pro-rata rule, since it'll affect anyone who for whatever reason already had money in a traditional IRA
Agree, this seems extremely important. If you've rolled a 401K to an IRA already, you need to consider this rule I think!
are you able to open your roth ira just holding an ITIN number? if so I guess you'll just need to put the number instead of the SSN?
If I max my 401k, can I still contribute to the backdoor Roth?
Thanks for this great video! I just started a new job with a salary that will push me over the income limit for the year 2023. While I expect to earn my full salary next year, in the event of the unexpected, I don't want to miss out on investing in my Roth. At what point do I have to stop contributing directly to my Roth IRA? In the first year that one's salary exceeds to the limit, is there an ideal time to open a traditional IRA in preparation for the conversion? Thank you so much!
You could save yourself headache by simply contribute $6,000 to traditional IRA and convert that to $6,000 Roth IRA in January.
Shouldnot be complete these steps before dec of the given tax year? In this case dec 2023.?
how long do u need to wait from ur ira account to roth ira account？
Do you do this every year?
If you are a couple filing jointly, do you do these steps for each person?
Yes, each account can have the 7k (2024) limit, a total of 7k per person per year (limits might change in the future)
Thanks for the info! I do have a question though. I currently have a 403(b) with my employer in Vanguard. Can I use some of that money to open a traditional IRA, and then move that money into a Roth IRA?
Q1 No you generally can't do that and there's really not advantageous to do so if you could. There may be a Roth 401(b) option at work. What prevents you from directly contributing $6,000 to Roth IRA?
Thank you very much for this video!
On 2:13 you mentioned that high income earners can’t open a Roth IRA account. Does it mean that backdoor strategy doesn’t work for those who are high income earners and don’t have Roth IRA account open?
The backdoor Roth IRA is for those who have higher incomes than the limits set by the IRS
I hope I'm not too late on this comment. Great video. Quick question. After your initial contribution to the Roth, are you allowed to make contributions every year thereafter or is that Roth done and the only growth comes from your invested money?
Yes you can contribute to the Roth every year up to the maximum contribution level.
Any thoughts on married filing separate?
If you’ve seen it, the income limit for contributing is quite ridiculous, and I’ve been told the back door method does not work for this. Is this true?
That limit applies to *_direct_* contribution to Roth IRA. There is no income limit for traditional IRA. There is no income limit for traditional IRA to Roth IRA conversion.
Silly question (one of many): Do I have to do this every single time I want to put money in a backdoor roth? Meaning, I do the steps in this video and fund my backdoor roth. Am I then allowed to contribute to the Roth directly? Or, do I literally have to open a new IRA and backdoor-convert to a (new) Roth each time I want to put $X into a Roth?
Also, I have a Roth that opened long before I surpassed the max income limits that I no longer contribute to - should I leave it alone? Is it causing me tax issues that I'm unaware of? This channel is absolutely fantastic - the content is presented perfectly and easy to follow and enjoy.
"Am I then allowed to contribute to the Roth directly?" If you are over the income limit to directly contribute to Roth IRA, you must use back door Roth IRA process.
"do I literally have to open a new IRA and backdoor-convert to a (new) Roth each time I want to put $X into a Roth?" After you convert your $6,000 traditional IRA to $6,000 Roth IRA, your t-IRA will have $0.00 balance. Next year you deposit $6,000 in that t-IRA and convert that $6,000 t-IRA to $6,000 Roth IRA.
@@alrocky Al - thanks! That makes sense now. I was scratching my head thinking 'do I have to open a new one each year in order to do the backdoor???' Appreciate the response!
Great video! The info was priceless, thank you. My scenario is as follows: I have a vanguard Roth IRA. I have yet to make any contributions for 2022, and I plan too. However, my wife and I file jointly and we are under the salary cap of $214,000 which is fine. Can I still do a Roth conversation even if I’ve already funded the $6,000 for 2022? And if so, what do you recommend, lump sum, monthly contributions. Or is there a limit?
Thank you!
Hi! Let me know if I'm answering your question. If you are under the salary cap, you can invest in the Roth IRA without using this method. And if you've already contributed your $6,000 via the regular method, no you can't do a conversion since you've already hit the annual cap. With the method, if you are investing directly into the Roth IRA, you can contribute however you like - lump sum, monthly, etc. I'd only recommend lump sum when doing the backdoor method.
Yes thank you. Once you contribute the annual amount, you cannot contribute anymore.
@@williamlarkin6765 "Can I still do a Roth -conversation- conversion even if I’ve already funded the $6,000 for 2022?" If that "$6,000 for 2022" was a traditional IRA, then yes you may convert that $6,000 t-IRA to $6,000 Roth IRA.
Two questions: 1) I'm watching this in Feb 2023 and I've submitted my taxes for 2022. I'm assuming that I should do this just for 2023 and forget about trying to make a prior year contribution. Is that the right way to think about it? and 2) is this a process you'd do every year OR do you re-use the same accounts?
If you are under income limit you can directly contribute $6,000 to 2022 Roth IRA. If over income limit you may still back door $6,000 toward 2022 Roth IRA although you may need 'amend' your 2022 returns. If you expect to be over income limit for 2023 you may back door $6,500 Roth IRA right now.
Do you a traditional IRA balance from prior years?
My wife switched job. Her previous employee rolled over pre tax 401k amount to a rollover ira . What is the best course for her to do backdoor Roth ira? Could she move her rollover ira money to her new employer pre tax 401k account? Once that is done . Could she the do the back door Roth ira?
OK I have a question, I got excited about watching your video so I called my financial advisor and was told that this particular concept is only good for those that do not have existing IRA accounts… I already have an IRA account and they would want me to transition my existing IRA account to a Roth and subsequently tax me on the capital gains. Is this in fact true? I was hoping to open up a brand new IRA account deposit new 2023 monies and then converted over to a brand new Roth IRA account. My financial person said this is not possible…..
Are you over the income limit for *_direct_* contribution to Roth IRA? More than or less than $138k?
Since you open both account type, can you use the same traditional IRA account for next year the convert/transfer it to the same ROTH ira axxount?
Yes. Just keep the balance in the traditional IRA at zero the whole year except for the day you are moving the money in there to convert to Roth.
If you are a citizen of usa and decide to live in some other country, can you still invest in Roth IRA from there? Is there any legal problem in doing so?
So what do you do on any potential gains from the traditional IRA contribution? Say it's a few bucks. Do you convert the whole amount (including the few extra bucks)?
If not, how do you handle that extra bit of money that was accrued.
Convert the entire amount. You potentially owe tax on the few bucks. Amount of tax will be minimal or zero. Use Form 8606
Well explained, thank you. Quick question. If I sell index funds after 2 years of holding it, am I paying capital gain taxes?
Are you assuming this occurs within Roth IRA?
@@alrocky yes
@@atbiaol1929 Transactions within Roth IRA are not taxable events so you will not owe capital gain taxes or any taxes for buying or selling or when it distributes dividends or ST/LT capital gains.
Hi, You said not to do trickle in your contributions. So does that mean I should be doing these steps every year with the full allotted amount allowed by IRS?
If you want to trickle in the funds, open a regular brokerage account & have the funds direct deposited into the money market account for the brokerage account. Once you have the $6,500 in there, transfer it to the traditional IRA then convert to Roth. Make sure the traditional IRA has a zero balance the whole year except the one day you are transferring from the brokerage account to the traditional IRA.
So you’ll have 3 accounts with Vanguard. A brokerage account, traditional IRA, and Roth IRA. The traditional IRA will always have a zero balance except 1 day a year. Once the money is in there, convert it to the Roth. Easy peezy!
Can I do an spousal back door Roth IRA ? Thanks
As long as at least one spouse has earned income (job), both may _indirectly_ contribute to Roth IRA via *back door* Roth IRA process.
Nice video! I have had a Roth IRA for years that I've contributed to when my income was below the $129,000 cap. For next year, I plan on opening a Traditional IRA and using the backdoor method. Would I need to open a new Roth IRA just to be the "backdoor" Roth? Or could I convert the money from my traditional IRA into the Roth IRA I already have?
Please clarify, do you have existing traditional IRA balance from previous years?
Hi, I have a question on the backdoor Roth conversion. I have deposited 6k into my vanguard traditional ira and converted it to a Roth ira once the funds are settled in the Vanguard IRA account (took around 3 days). Now I see $2.2 in the IRA account. Is it the interest payment from the traditional IRA (since the money market rate is around 4%)? If yes, what are the tax implications in these scenarios? Should I transfer the 2.2 to Roth as well? Thanks
Convert the $2.20 in your traditional IRA to your Roth IRA. You will owe tax on the $2.20. Fill out Form 8606.
If you do it a second year, do you need to open a new IRA account and convert it into a new Roth IRA account each time? Or can you make an after tax contribution in your old IRA account and roll it into your old Roth IRA account?
Also wondering the same thing!
great video! Can we contribute more than $6,000 to traditional IRA?
For 2023 you may contribute *$6,500* to traditional IRA.
So - is there a conversion limit in a given tax year? Or does the amount you are converting only equal to the traditional IRA contribution in a given year?
Q1&2 No