My coworker swears up and down that you can double up on your IRA contributions by using a backdoor Roth. My internet searches don't lead me to believe that is true. Can someone explain how I might be able to double up on my Roth contribution by going through the backdoor?
Thanks.

Does the co-worker mean 401k after tax contribution?

You can load up the 401k up to like 53K a year between pretax, Roth and after tax

Yeah that's what I figured. Basically all a backdoor does is let you move money into a Roth if you're over the earning limits, correct?

sellthefarm said:

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Yeah that's what I figured. Basically all a backdoor does is let you move money into a Roth if you're over the earning limits, correct?

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yes

you would deposit up to 5500 in a traditional IRA
then convert it to a ROTH, usually the next day or so

bigfooticus said:

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OasisMan said:

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sellthefarm said:

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Yeah that's what I figured. Basically all a backdoor does is let you move money into a Roth if you're over the earning limits, correct?

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yes

you would deposit up to 5500 in a traditional IRA
then convert it to a ROTH, usually the next day or so

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Does the after tax money (non-deductible) you put in the traditional get taxed again on the conversion or only any gains in the minimal timespan when you convert to the Roth?

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Trad IRAs are tax deductible. You get the discount on your tax return.

You pay taxes on the conversion to a Roth IRA.

He's talking about if you're over the threshold and it's not deductible.

Quote:

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Trad IRAs are tax deductible. You get the discount on your tax return

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You need to review the income caps and phase-outs. Your statement is not correct.

If you make a non-deductible contribution to a traditional IRA and then roll it over to a Roth you would only owe tax on any gain. I leave mine in a money market and move it over the next day so there's not a gain.

GarlandAg2012 said:

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If you make a non-deductible contribution to a traditional IRA and then roll it over to a Roth you would only owe tax on any gain. I leave mine in a money market and move it over the next day so there's not a gain.

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Thanks, this is what i thought but Fidelity was giving me conflicting info vs other research online and vagueness in many articles...(not sure what happened to my original post, issues with ipad)

Do you have to report anything on your taxes if you do a non-deductible TIRA contribution and then convert to RIRA? There would seem to be no tax consequence whatsoever.

exp said:

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Do you have to report anything on your taxes if you do a non-deductible TIRA contribution and then convert to RIRA? There would seem to be no tax consequence whatsoever.

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Yes, you still need to file a form 8606. https://www.irs.gov/forms-pubs/about-form-8606

When you roll the TIRA over to a RIRA a distribution from the TIRA will be reported to the IRS. You file a form 8606 to show that it's going to a RIRA and calculate the tax owed.

Edit to add: you definitely want to file that form, because the custodian will show a distribution on a 1099-R. My accoutnant forgot to include it in an older return and the IRS sent me a letter stating I owed tax + penalty for taking an IRA distribution in my 20s.

Also, if you're not rolling over a non-deductible TIRA in full, you have to follow the pro-rata rules for how much of the conversion is converting pre-tax and how much is converting post-tax dollars:

https://www.rothira.com/what-is-a-backdoor-roth-ira#tax

I am not an accountant. I am definitely not your accountant.

What your friend might be referring to is a POST 1986 AFTER-TAX plan. This is where you over contribute to your pretax 401k and then continue to contribute. The rest of the money after 18k goes in as after tax money. You can then roll the after tax money into a Roth IRA even if you have already maxed out your Roth IRA.

Only some plans allow for this to happen and mine happens to allow it. Usually it is when you over contribute and then leave the company or retire, but I found out today my plan allows for me to roll some of it over even while still working for my company. I had to verify several times over the phone because I refused to believe it until I talked to the company who handles our 401k.

It is possible and I did not know that.