The fact the traditional IRA is from a rollover does NOT exempt it from pro rata. You will likely owe tax on this Roth conversion.

Did you even read the question?

hypeiv is right.

not hedge is wrong.

Can you define a dummy IRA?

Sorry, but that isn't how it works. You are wrong.

OP, if you want to Backdoor Roth, the pro rata rule will apply no matter how many accounts you open.

Did not hedge pass the 7 and 66 and still giving bad advice?

Look at how this goes on a tax return and you'll understand. Total of all IRAs must be $0 (rollover, deductible contribution, SEP, SIMPLE, who cares) if you're trying to get around the pro rata mess.

You can roll the funds into a 401k. Or if self employed, start a SoloK and roll it into there. Then the backdoor is clean in future years.

Again, did you even read the question? What (hundreds of) fools let you manage their money?

canadianAg- I apologize for cluttering up a straight forward thread. Just listen to hypeiv and mosdefn14.

not hedge- LOL. You're apparently an idiot, and should not be offering advice here.

not hedge said:

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I'm talking to a wall with you, you clearly didn't read what he wanted. Managed more than you ever will chief

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AggieT said:

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hypeiv is right.

not hedge is wrong.

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canadianAg said:

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I know this gets discussed frequently but had a quick question. I understand if you have a traditional IRA with funds in it, then when you do a backdoor, whatever you rollover will be pro-rated so some of it is taxable.

Does that rule apply if your traditional IRA is a rollover from an employee 401k? Or can you start with a fresh non-rollover traditional IRA and avoid the pro-rata complications by Judy leaving the rollover account alone?

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Having the existing Traditional IRA makes doing the back door Roth a no go, as far as paying no tax on the conversion is concerned. The number of accounts / opening a new account does not matter.

I think maybe not hedge is reading the situation as the other funds are in a 401k, but they are not...

If the client had $0 in IRAs to begin with and was only opening up a "dummy IRA" as a pass-through, then the pro-rata would be moot because there are no other dollars to consider. So with a young brand new client who has never rolled over a $100k 401k or has had years of contributions, the contribute-to-IRA-convert-to-Roth is very simple. However, if they have $100k in an IRA to begin with, and then you're maxing out their IRA annually ($6k) and converting that to a Roth, then 5.6% of that ($6k/$106k) would not be taxable at the time of conversion.

The conversion can still make sense as a tax diversification tool and an RMD consideration, it's just an important often overlooked consideration.

This is why in some cases it makes sense to leave your old 401k packed with pre tax money where it's at.


Oh….and hedge is an idiot

not hedge said:

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I'm talking to a wall with you, you clearly didn't read what he wanted. Managed more than you ever will chief

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You didn't manage anything, chief. You were someone's licensed errand boy and then quit because you were too much of a pansy ass to prospect for your own clients.

not hedge said:

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That's cute you put the CFP designation on a football message board. Wonder what the ethics guide had to say about that advertisement Frat boy

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You can't be serious now, can you? You're gonna report him to the CFP Board because you outed yourself as an idiot?

Ok.

He's displaying the marks correctly, they'd probably give him an award

not hedge said:

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Did I say I was? Read again

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Oh ok.

not hedge said:

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That's cute you put the CFP designation on a football message board. Wonder what the ethics guide had to say about that advertisement Frat boy

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You have a lot of growing up to do bud

Dear CFP Board of Ethics,

My name is not hedge and on an Internet forum, a guy named Jerry Burdizzo hurt my feelings. Please intervene.

not hedge said:

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You're the one who called me a glorified errand boy, then sayin I need to grow up. Real classy, but not surprised given your general disposition. By product of nepotism is my best guess

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Nope, but that's a common excuse in this business. The thought that if you're not a benefactor of family wealth or the family practice that it's impossible to succeed. I'm sure that's why you quit, but one day you'll look in the mirror and realize you were just being lazy.

I truly believe that somewhere there is a forum where you will not piss everyone off and find a home.

Might I suggest the East Texas board?

5 Star General