Backdoor Roth I.R.A.
Client has existing deductible I.R.A.
A.G.I. in excess of $ 191,000.00.
Can we cherry pick the assets to be converted? Could the client make a non deductible contribution that is converted immediately and avoid tax? Or should we open a new I.R.A. account, then convert?
Thanks!
Permalink Submitted by Alan - IRA critic on Mon, 2014-12-15 17:51
The taxable and non taxable amounts for the conversion is determined on Form 8606, and all IRA account values are included in the calculation. The existing pre tax IRA account will make the conversion mostly taxable. One way to avoid that is to transfer the pre tax IRA amount into an excepting employer plan such as a 401k. The IRA basis (after tax contributions) remains and can be converted tax free. Opening new IRA accounts will not work since all IRA accounts are included in the calculations.