Backdoor Roth IRA with SEP IRA assets
I would like to contribute to a non-deductible traditional IRA and covert the proceeds to a Roth IRA. I don’t currently have any traditional IRA assets, but I do have a SEP IRA. Does the SEP IRA impact my ability to execute the backdoor Roth strategy?
Permalink Submitted by Alan - IRA critic on Wed, 2014-03-26 16:38
Yes, the SEP IRA year end value must be included in line 6 of Form 8606 and will be counted as pre tax IRA assets when the taxable amount of the conversion is calculated. If you were able to roll the SEP IRA into a qualified employer plan by the end of the year if you also have such a plan from another job, it will eliminate the SEP IRA from the line 6 and result in your conversion being tax free.