{ "media_type": "text", "post_content": "New to investing, but want to make sure I'm doing this correctly. I've maxed out my 401K and am looking to open an IRA. I know everyone recommends backdooring this into a Roth IRA, but if my plan is to move/retire to a state with no state income tax, wouldn't traditional make more sense? Or am I overthinking this?\nAlso, if I go the backdoor route, how do I make sure I don't get taxed again, when i convert to a Roth?\nThanks in advance!\n", "post_id": "5ff745ce06cba0002fc96f8c", "reply_count": 6, "vote_count": 2, "bowl_id": "59064a3cb12379001006592c", "bowl_name": "Personal Investment Chatter" }

New to investing, but want to make sure I'm doing this correctly. I've maxed out my 401K and am looking to open an IRA. I know everyone recommends backdooring this into a Roth IRA, but if my plan is to move/retire to a state with no state income tax, wouldn't traditional make more sense? Or am I overthinking this? Also, if I go the backdoor route, how do I make sure I don't get taxed again, when i convert to a Roth? Thanks in advance!

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You will file a 8606 showing basis. Is your income over the Roth limit? If not no need to backdoor.

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So if you do the backdoor, you will contribute to traditional and get no deduction. You will therefore have basis in that contribution. When you convert there will be no tax other than earnings in the traditional account between contributions and conversion. If you just leave it in the settlement fund and convert right away that should not be more than a couple cents, if anything. If you use TurboTax or similar software this should not be an issue

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To you original point if you get no deduction for traditional Ira, you get no benefit and a Roth or even a taxable brokerage would likely be better

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You will still have federal taxes to pay when you retire.

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so it sounds like the general consensus is to not overthink it and just do the backdoor Roth

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