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This is not entirely correct. If you participate in an employer 401K and have an income greater than $76K (as a single person) in 2020, you can't contribute to

This is not entirely correct. If you participate in an employer 401K and have an income greater than $76K (as a single person) in 2020, you can't contribute to your traditional IRA. Well, you can't deduct the contribution, so you're putting in after tax income. I learned this when Turbo Tax wouldn't let me deduct my IRA contribution. Oops! So now I have to go through the hassle of clawing the money out of my traditional IRA, or I'll have to pay tax on it again when I take it out. See this => https://www.investopedia.com/ask/answers/07/401(k)_ira.asp https://www.investopedia.com/ask/answers/07/401(k)_ira.asp You're looking for the section called "Deductibility of IRA Contributions If You Also Have an Employer Plan (2021)". #nottaxadvice

prezjordan 5y ago
> $6,000 post-tax contribution to IRA, then Roth Conversion "post-tax" is the important bit!
- wikibob 5y ago
  Correct, the $6,000 you put into your IRA is funded with money that you pay ordinary income tax on. You then do a IRA to Roth IRA conversion with your retirement plan provider (Vanguard, Fidelity, etc). Then you file IRS form 8606 to report two things: - Nondeductible contributions you made to traditional IRAs. - Conversions from traditional IRAs to Roth IRAs. This is not financial advice, hire your own fiduciary financial advisor
  - devoutsalsa 5y ago
    Interesting. I'll look into it.
wikibob 5y ago
I am not sure which part you are stating is not correct. The intention is to contribute after-tax income. For your situation, a better move would be for you to do a Roth Conversion of the money in your traditional-IRA to move it to Roth IRA dollars. You do this with your broker, and then file form 8606 with the IRS. The $6,000 "Roth Backdoor" is indeed with post-tax dollars. This is intended. There are significant benefits to having the majority of your retirement savings in a Roth, including no minimum distributions, and the ability to withdraw funds for unqualified reasons 5 years after your last contribution. This is not financial advice, hire your own fiduciary financial advisor

prezjordan 5y ago

> $6,000 post-tax contribution to IRA, then Roth Conversion "post-tax" is the important bit!

wikibob 5y ago
Correct, the $6,000 you put into your IRA is funded with money that you pay ordinary income tax on. You then do a IRA to Roth IRA conversion with your retirement plan provider (Vanguard, Fidelity, etc). Then you file IRS form 8606 to report two things: - Nondeductible contributions you made to traditional IRAs. - Conversions from traditional IRAs to Roth IRAs. This is not financial advice, hire your own fiduciary financial advisor
- devoutsalsa 5y ago
  Interesting. I'll look into it.

wikibob 5y ago

I am not sure which part you are stating is not correct. The intention is to contribute after-tax income. For your situation, a better move would be for you to do a Roth Conversion of the money in your traditional-IRA to move it to Roth IRA dollars. You do this with your broker, and then file form 8606 with the IRS. The $6,000 "Roth Backdoor" is indeed with post-tax dollars. This is intended. There are significant benefits to having the majority of your retirement savings in a Roth, including no minimum distributions, and the ability to withdraw funds for unqualified reasons 5 years after your last contribution. This is not financial advice, hire your own fiduciary financial advisor