Personal Investments • Backdoor Roth IRA Strategy

Happy New Year everyone-

I am seeking confirmation that my understanding of how to avoid pro-rata taxation on backdoor roth IRA contributions is correct and whether my forward-looking strategy makes sense.

A few years ago my DW and I stopped contributing to our Roth IRAs because we hit the income limit and the pro-rata rule didn't make backdoor Roth IRA contributions make sense. Since then...
1) Our fed marginal tax rate has become 35%+
2) My DW semi retired and works PT, putting 100% of wages (~$5k annually) into 401k
3) After reading a few posts this week, I realized I could move my tIRA (~$25k) to my current employers 401k to avoid pro-rata issues Image may be NSFW.
Clik here to view.

So my plan is..
For my DW, since 100% of compensation is going to 401k, she does not have reportable earnings to fund a backdoor roth. We will continue to put 100% of her wages into her 401k.

I will move my tIRA into my company's 401k this year to avoid pro-rata taxation of my backdoor roth contribution.

Does the above make sense to you?

Thank you.

Statistics: Posted by gck1891 — Wed Jan 01, 2025 2:13 pm

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