Hello,
I am new to this forum so here is my backstory first. I recently transferred my traditional Ira and Roth IRA from northwestern mutual to fidelity to escape fees. I made that mistake 10 years ago because I knew nothing but now that’s the past and looking to self manage as much as possible moving forward. Looking for some suggestions on the topic if the reverse rollover and instead of paying fees for advice (exactly what I was aiming to get out of) thought I would bounce this here.
I am currently in the marginal tax bracket of 24 percent. I have been contributing the max to my 401k doing a 50/50 split between the traditional and 50/50 split. I plan to do this at least through next year before the tax laws potentially change. I am doing the same for my wife
Because I am not deferring the full 23k I believe that could be why we are starting to be phased out of the Roth IRA. My wife and I could each contribute 1770 this year so I did that. My wife does not have a trad Ira so I did the back door Roth for the remainder of the 6500 max contribution. However, I have not done this for me since I have a traditional Ira with pretax dollars rolled over from a previous employer. I have some after tax dollars as well but don’t want to convert it because I will be facing the pro rata rule.
Right now my total balance in the trad Ira is roughly 200k with 4950 dollars in non deductible contributions. I read in this forum I can roll the pretax dollars to my 401k and then convert the 4950 tax free and do the backdoor Roth this year.
It seems simple from a tax perspective especially since my 4950 basis is tracked on my 8606. However, I am weighing whether it makes sense from an investment standpoint, with funds more limited in the 401k. My 401k funds do not have high expense ratio but there are index funds (I believe large cap growth, small cap index, international and total bond, but I need to double check).
Any insight appreciated. I can provide more info if it helps.
I am new to this forum so here is my backstory first. I recently transferred my traditional Ira and Roth IRA from northwestern mutual to fidelity to escape fees. I made that mistake 10 years ago because I knew nothing but now that’s the past and looking to self manage as much as possible moving forward. Looking for some suggestions on the topic if the reverse rollover and instead of paying fees for advice (exactly what I was aiming to get out of) thought I would bounce this here.
I am currently in the marginal tax bracket of 24 percent. I have been contributing the max to my 401k doing a 50/50 split between the traditional and 50/50 split. I plan to do this at least through next year before the tax laws potentially change. I am doing the same for my wife
Because I am not deferring the full 23k I believe that could be why we are starting to be phased out of the Roth IRA. My wife and I could each contribute 1770 this year so I did that. My wife does not have a trad Ira so I did the back door Roth for the remainder of the 6500 max contribution. However, I have not done this for me since I have a traditional Ira with pretax dollars rolled over from a previous employer. I have some after tax dollars as well but don’t want to convert it because I will be facing the pro rata rule.
Right now my total balance in the trad Ira is roughly 200k with 4950 dollars in non deductible contributions. I read in this forum I can roll the pretax dollars to my 401k and then convert the 4950 tax free and do the backdoor Roth this year.
It seems simple from a tax perspective especially since my 4950 basis is tracked on my 8606. However, I am weighing whether it makes sense from an investment standpoint, with funds more limited in the 401k. My 401k funds do not have high expense ratio but there are index funds (I believe large cap growth, small cap index, international and total bond, but I need to double check).
Any insight appreciated. I can provide more info if it helps.
Statistics: Posted by Osampat — Tue Apr 02, 2024 4:37 am