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Mentor
I didn’t think traditional post tax IRAs had a cap?
They don’t have a cap on in me and you can still contribute, however, the contribution is just not deductible in the current year and creates basis (Form 8606) in the account. Still a benefit to make a Traditional IRA contribution because the earnings continue to grow tax-deferred. Or you can make the Traditional contribution and back door it into a Roth IRA.
No income limit to contribute to traditional IRA. I think the limit comes in for tax deduction purposes for married filing jointly at $125k, but anyone at any income can contribute the $6k (or $7k for catch-up contributions).
Isn’t the limit for a Roth IRA contribution?
Coach
https://www.bogleheads.org/wiki/Backdoor_Roth
You can do backdoor investing once you pass certain income thresholds
You can always contribute to a traditional IRA. However, as your MAGI increases, your ability to deduct contributions decreases, effectively making the IRA worse than a brokerage account (eventually).
Roth IRA also has a MAGI limit where you can no longer contribute.
The workaround for both of these issues is the backdoor Roth. There is still a bill out there that would eliminate it, but my guess is that it will not pass for 2022 at this point.
Enthusiast
I have $3k that Fidelity helped me convert to a Rollover IRA (originally a trad 401k from previous employer, 2021). I read that you have to have an empty trad IRA by the end of the year in order to convert to a backdoor Roth. Is that true? Can I still do a backdoor Roth if I just create a second trad IRA account to deposit post-tax $ then convert?
Or should I wait to transfer the Rollover IRA/prev 401k funds into my new employer's 401k, which leaves the IRA acc $0 and then deposit? But it's March now, so does the 'end of year' rule still apply?
Should specify that I’m single and have a 401k as well, hence those limits
Useful, but 401k doesn’t have an income limit, and the 401k saving limit doesn’t affect IRA.
A2 There is no way to do a mega backdoor if your employer does not offer it, correct?
Unfortunately no