Backdoor - IRA to Roth conversion steps on Fidelity of post tax 6k
Dec 21, 2020
8 Comments
Blinders,
Noob here with Backdoor Roth, let me know if this is a viable option for converting post tax amount of 6K as Roth IRA rollover. I am not eligible to contribute directly to a ROTH ira account
1) transfer (post tax) 6K from a savings account to traditional IRA account(Fidelity)
2) open Roth account
3) on Fidelity, transfer from traditional IRA to Roth account
Will these steps be deemed as backdoor IRA to roth conversion per IRS?
#personalfinance
comments
Not sure why the fidelity website says I owe taxes on that conversion. Any thoughts?
In the event you didn’t convert immediately there could be some additional funds from investment appreciation or interest that would also get reported on the tax form. But only the portion on top of the contribution limit would likely be taxable.
This is assuming you don’t have any additional traditional IRA account funds. To do the back door Roth without having to pay tax on the converted amount after the limit you cannot have any funds in traditional Ira at the year end. All other traditional funds would have to get rolled over to a 401k if you wanted to keep them pre-tax
If you still have funds in any traditional Ira at year end after you do the Roth conversion you might have a tax liability for the pro rata amount or pro rata rule.
Specifically for step 3 the transfer from Traditional IRA to Roth IRA has to be done over the phone with Fidelity, there isn’t a way to do it from the website or the mobile app.