Need a TPA? You do have to do a , but my understanding is that for a solo k , you can do a EZ which looks awfully easy. Yeah that happened to me before. I just left the few cents in the traditional IRA until the following year.
First off thanks for the heads up on the back door Roth combined with self employment. One more interesting fact I recently determined. My wife became a stay at home mom his year. However there is an exception for a non working spouse. A spousal Roth IRA for a high earner also needs to go through the backdoor. See Kay bailey Hutchinson spousal Ira limit: For , if you file a joint return and your taxable compensation is less than that of your spouse, the most that can be contributed for the year to your IRA is the smaller of the following two amounts:.
The total compensation includible in the gross income of both you and your spouse for the year, reduced by the following two amounts. My wife for the first year of our marriage has no income. I had thought since she did not work I could not contribute to her Roth IRA, since she has no income, unless I did a conversion. I recently learned I was wrong. I guess it depends on the definition of high earner as this applies to someone under about k a year depending on the sophistication regarding taxes and sources of income.
Sometimes better than a taxable account, but often not and often not by much.
June 1940-October 1940
The Roth IRA is clearly better. Is it even necessary to report our non-deductible Traditional IRA contributions? What about switching from self-employed SEP to Solo k i.
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Opening a new ira and rolling over the old SEP balance? Are there any issues with switching retirement account types for the same business? Do you suggest turbotax users pay for the audit representation insurance? Is it expensive to get representation after the fact? Jim, first off, thanks so much for this site.
Last year, I did this process for the first time, but now realize I may have an issue. Before starting the process, I had a Rollover IRA and needed to sell all of the shares in it and roll the money back into my k. I did that. Does this cause problems for the conversion that I did last year? And how can I best address this issue so that I can make the contributions for and ? Not really. You just document it on the for tax year And fix it this year by rolling it over with your and contributions. You can still do contributions just fine. But now you know why I recommend you do the contribution and the conversion in Easier paperwork.
Thanks so much. Really appreciate it.
Speaking of paperwork, I would love to avoid having to do this because my Rollover IRA and my work k are with two different institutions, so it is a bit of a paperwork hassle. You can convert it. Could I still do it? Is it still considered pre-tax money?
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Thanks again! Part is pre-tax and part is post tax. With tiny amounts, it is often simplest just to convert them and pay any tax due. Which would really suck obviously. It does. If your accountant told you that, he was wrong. Read line 6 of Form It says:. If you thought this job situation or this retirement plan situation was only going to last a few years you could contribute to a non-deductible IRA each year with a plan to convert it all eventually.
Do you have any prior posts helping decide whether or not not to do the conversion with an unavoidable pro-rata situation? Right now we have around 50k in the Simple IRA and are contributing 11k as a backdoor Roth between the both of us this year. The first is a no-brainer, the second requires some careful calculations and assumptions and even then may turn out to be the wrong move.
I just filled in a hypothetical for and now realizing how much this sucks. Is there any way to reverse my contributions to the backdoor Roths for both and I already converted my ? Yes, you should still be able to recharacterize both of them to a traditional IRA. You can then just leave it in a non-deductible IRA and invest it, or you should still be able to reverse the contribution itself, paying taxes only on the gains.
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Either this is not true, or I am am a moron and violating tax law. You can make your SEP contributions throughout the year, move it into your K by say December 1, and then do the backdoor roth through a traditional IRA before December That way on December 31 your basis in IRAs is zero, which is the amount reported on form , making the backdoor roth not taxable. I advise them to continue to contribute to their nondeductible traditional IRA, after the two years is up they move the SIMPLE money to a K and then the nondeductible traditional money into a Roth- same advice as posted above.
Finally, there are ways to do this besides opening up a solo K. If your previous employer allows rollovers from other plans, such as self employment plans, you can take advantage of this to reduce your IRA basis to zero every December I am a solo practice ophthalmologist single employee excluded from SEP matching until because she started to work the year after I did and max out my SEP.
Additionally, you advocate putting IRA money into a solo K. And just like WCI I get these questions answered all the time for another thread I give financial advice for so this a cut and paste stock answer…. Three other employees have worked for her for under three years, so she can use the three year test for matching. And I know plenty of other people in this situation. Contrast this to a K where you either have to pay a 0. I see both points. The SEP would then have to be cleared into a k prior to the conversion. That comment refers to an independent contractor without employees.
Much more complicated.
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His job was to catch the ball on the bounce as quickly as he could and call "Stop!
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