Hi folks,
Since my wife & my joint income for 2024, and for 2025 (expected) will be above the annual ROTH limit, we are considering the backdoor Roth option.
Both of us are over 50. Neither of us have IRAs.
We do have fully funded employer 401ks (which do include a bit of Roth IRA components).
We have a joint active Vanguard account (opened many years ago).
Do the following steps look right?
1. Open a Vanguard Trad IRA in my name.
2. Open a Vanguard ROTH IRA in my name.
3. Inform Vanguard of my conversion plan.
4. Transfer $8k from bank to the vanguard cash or clearing account.
5. Await $8k to show up in the vanguard account
6. Transfer $8k (as after-tax $) to the Vanguard IRA
7. As soon as it appears (hopefully right away), convert all the $8k from IRA -> ROTH IRA.
8. Invest the ROTH in a Vanguard US large-cap ETF
8. Repeat 1 thru 8 in my wife's name (i.e., open her IRA and her ROTH) , on the same joint Vanguard account.
9. Thus $16k total saved to ROTH for tax-free growth. To be used anytime after 5 years.
10. Mark above in our 2024 tax returns. Not sure what this involves - we file a single return as married-filing-joint so would these be separate additional forms?
11. Since neither of us have IRAs, am assuming no tax implications/complications.
12. Repeat 1 thru 9, but this one 'earmarked' for 2025. That'll be included in the 2025 tax return next year.
13. Thus another $16k saved to ROTH for tax-free growth.
13. Continue above steps using the same now-empty IRA accounts for next few years until retirement or job loss.
14. btw, I am considering retirement in 4 yrs, wife in 6 years .. so not sure above is worth the effort!
thx
-john
Since my wife & my joint income for 2024, and for 2025 (expected) will be above the annual ROTH limit, we are considering the backdoor Roth option.
Both of us are over 50. Neither of us have IRAs.
We do have fully funded employer 401ks (which do include a bit of Roth IRA components).
We have a joint active Vanguard account (opened many years ago).
Do the following steps look right?
1. Open a Vanguard Trad IRA in my name.
2. Open a Vanguard ROTH IRA in my name.
3. Inform Vanguard of my conversion plan.
4. Transfer $8k from bank to the vanguard cash or clearing account.
5. Await $8k to show up in the vanguard account
6. Transfer $8k (as after-tax $) to the Vanguard IRA
7. As soon as it appears (hopefully right away), convert all the $8k from IRA -> ROTH IRA.
8. Invest the ROTH in a Vanguard US large-cap ETF
8. Repeat 1 thru 8 in my wife's name (i.e., open her IRA and her ROTH) , on the same joint Vanguard account.
9. Thus $16k total saved to ROTH for tax-free growth. To be used anytime after 5 years.
10. Mark above in our 2024 tax returns. Not sure what this involves - we file a single return as married-filing-joint so would these be separate additional forms?
11. Since neither of us have IRAs, am assuming no tax implications/complications.
12. Repeat 1 thru 9, but this one 'earmarked' for 2025. That'll be included in the 2025 tax return next year.
13. Thus another $16k saved to ROTH for tax-free growth.
13. Continue above steps using the same now-empty IRA accounts for next few years until retirement or job loss.
14. btw, I am considering retirement in 4 yrs, wife in 6 years .. so not sure above is worth the effort!
thx
-john
Statistics: Posted by johnyboyd — Mon Jan 27, 2025 7:04 pm