Backdoor Roth

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Topic Author
newbieinvestor011
Posts: 10
Joined: Fri May 14, 2021 12:22 am

Backdoor Roth

Post by newbieinvestor011 »

me and wife both have around 10k in traditional ira account opened around 2011.. we never did IRA after 2011 until last year thinking it's not going to be any tax benefit to us. Now we realized we could take into consideration of backdoor roth ira and get some tax benefits. Before 2020 tax cutoff, we did invest 6K ira to each our new accounts in fidelity but have not submitted 8066, my understanding with a penalty of 50$ IRS allow late reporting. I am wondering whats the best way to do backdoor ira for this year after roll over of old traditional ira account to 401k , since old traditional ira is done in small brokerage account (now its ally after many mergers), I don't have exact amount of pre-tax/post-tax amount in that account. I did talk to an IRS agent over phone and asked if I am violating any rule if I just roll old traditional ira account to 401K , his answer was i will be taxed twice .. At this time, i am just looking for simplification, I don't think double tax for 2-4k is a problem. Thank you.
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FiveK
Posts: 11542
Joined: Sun Mar 16, 2014 2:43 pm

Re: Backdoor Roth

Post by FiveK »

newbieinvestor011 wrote: Sat May 15, 2021 10:40 pm me and wife both have around 10k in traditional ira account opened around 2011
Did you deduct those contributions?
Before 2020 tax cutoff, we did invest 6K ira to each our new accounts in fidelity but have not submitted 8066, my understanding with a penalty of 50$ IRS allow late reporting.
Just send in the signed forms 8606, and don't worry about the $50 unless the IRS asks for it. They rarely (never?) do.
I am wondering whats the best way to do backdoor ira for this year after roll over of old traditional ira account to 401k...
If you can move all the pre-tax money in your IRAs to 401ks (you will have to do this separately for each of you), then you should have no problems with the backdoor Roth process.
I don't have exact amount of pre-tax/post-tax amount in that account. I did talk to an IRS agent over phone and asked if I am violating any rule if I just roll old traditional ira account to 401K , his answer was i will be taxed twice .. At this time, i am just looking for simplification, I don't think double tax for 2-4k is a problem. Thank you.
This gets back to the first question above: did you deduct contributions? If so, then you have no post-tax funds (aka basis) in your current IRAs. If you did not deduct contributions, then your contribution amounts are your basis.

Does the Backdoor Roth - Bogleheads wiki article help?
Topic Author
newbieinvestor011
Posts: 10
Joined: Fri May 14, 2021 12:22 am

Re: Backdoor Roth

Post by newbieinvestor011 »

"Did you deduct those contributions?"
I am trying to find the exact after tax contribution amount, opened a ticket with the broker and hoping to get an answer soon.
I am not sure if its a violation if I roll the pre-tax(~1000) and post-tax(~2000/3000) + gains into 401k. I might get double taxed on the 2000/3000 after 30 years but it helps to simplify the iras now.
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FiveK
Posts: 11542
Joined: Sun Mar 16, 2014 2:43 pm

Re: Backdoor Roth

Post by FiveK »

newbieinvestor011 wrote: Sun May 16, 2021 12:09 pm
"Did you deduct those contributions?"
I am trying to find the exact after tax contribution amount, opened a ticket with the broker and hoping to get an answer soon.
Do you have your federal tax returns from those years to confirm that you did not deduct the IRA contributions (or know "for sure" that you didn't)?
Topic Author
newbieinvestor011
Posts: 10
Joined: Fri May 14, 2021 12:22 am

Re: Backdoor Roth

Post by newbieinvestor011 »

yes, I have the federal tax returns from all these years. I have deducted $750 in 2010 in my account, but we did not deduct IRA contributions after that. If my estimate is correct i have contributed post tax amount of additional $2500 to both mine and wife's ira and is both valued at around $10,000 each. i have opened a ticket with broker to find out my exact contribution, that broker has done 3 mergers i am afraid if they probably don't have that information easily available. I am not sure if IRS would have a problem if I roll that 401k account, if anything, i will be loosing with double tax of that $2500 and not IRS. But I understand rules are rules.
cas
Posts: 1347
Joined: Wed Apr 26, 2017 8:41 am

Re: Backdoor Roth

Post by cas »

newbieinvestor011 wrote: Sun May 16, 2021 12:46 pm yes, I have the federal tax returns from all these years. [. . .] i have opened a ticket with broker to find out my exact contribution
The IRA custodian is required to send you and the IRS Form 5498 showing how much you contributed to your IRA every year. Form 5498 typically arrives in May (or a month or so after the tax filing/IRA contribution deadline).

Do you know what you tend to do with Form 5498 when it arrives? Put it in your tax folder (physical or virtual) for that year? (maybe it is with the tax returns). Put it in a separate Form 5498 folder? Throw it out? (oops).

Alternatively, I've never looked, but there has been lots of chatter on the forums this year that the IRS website where you can get your tax transcripts online has some number of years of tax info (10?), including the Form 5498s they received from the IRA custodian(s).
Topic Author
newbieinvestor011
Posts: 10
Joined: Fri May 14, 2021 12:22 am

Re: Backdoor Roth

Post by newbieinvestor011 »

thanks .. time to do some searches .. looks like couple of options if that does not work , contact broker and see if that can get 5498 or request irs
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