Backdoor - IRA to Roth conversion steps on Fidelity of post tax 6k

Amazon
jtcw

Go to company page Amazon

jtcw
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

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TOP 8 Comments
  • Pivotal
    xohC88

    Go to company page Pivotal

    xohC88
    I am doing the same exactly right now, haha. Also a noob.
    Not sure why the fidelity website says I owe taxes on that conversion. Any thoughts?
    Dec 21, 2020 4
    • You will get a tax form that you need to file with your tax return for the conversion of the funds to Roth, but when you file for taxes you won’t owe any tax on the amount converted that is within the contribution limit.

      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.
      Dec 21, 2020
    • Amazon
      jtcw

      Go to company page Amazon

      jtcw
      OP
      I. Fidelity doesn't keep track of where the money came from into the IRA account.. pre tax or post tax.. I think most ppl have pre-tax money in their IRA. So this is a generic FYI about tax
      Dec 21, 2020
  • Yes those are the exact steps I do for Backdoor Roth on Fidelity.

    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.
    Dec 21, 2020 1
    • Uber
      unrated

      Go to company page Uber

      unrated
      You can do it on the site now but you have to wait a day or so between the contribution and rollover. They can still do it right away over the phone for you
      Dec 21, 2020
  • Pandora
    Pfaa13

    Go to company page Pandora

    Pfaa13
    To keep it simple, do the conversion for 2020 before Dec 31st 2020. If you do in 2021, the taxe reporting gets complicated.
    Dec 21, 2020 0