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Hi Fishes,
What will be my in hand salary
Yoe - 4
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Chief
You aren’t getting taxed Again on the conversion. There no double tax. You contribute post tax money and then the conversion is a tax free event.
You’ll get asked when you file if it was deducted from your $. The answer should be “no,” then you just have to do the paperwork for it.
I generally do the full amount into Traditional 401k and then the full amount into a Backdoor Roth. This hedges against either possibility of my retirement wages being below or above my current salary.
Also the big benefit of the Roth IRA is that it’s taxed advantaged, when compared to the Traditional IRA (assuming you’re above the income threshold to deduct the IRA contribution, which if you’re talking about the backdoor, you definitely are). So even if you’re funding a Roth 401k, the Roth IRA is just another bucket of tax advantaged investment money that you can use.
Correct. $20.5k to Roth 401k via payroll deduction and the. $6k to Roth IRA by opening both a traditional IRA and a Roth IRA, depositing $6k in cash to the Trad IRA and then immediately converting that money to the Roth IRA.
Note that if you currently have a traditional IRA balance, you should probably consult a financial advisor, as the pro rata rules around backdoor conversions with existing IRA balances can be complicated. (Simplest solution is to see if your 401k provider allows you to roll a Trad IRA balance into a traditional 401k.)
Can the potential prohibition of back door conversions be retroactive for 2022? Re pending legislation
Can it be? Sure. Will it be? Probably not. Also BBB isn’t likely to pass to the point that, for this matter, I’m not worrying about it at all, and I say that at a progressive democrat.