Roth Conversion from a SEP IRA
Can you do a backdoor Roth from a SEP IRA? Is there a holding period for a SEP IRA before doing a Roth conversion?
Thanks! This client is young and willing to pay the taxes up front for the benefits of the investments being held in a Roth for many years.
Permalink Submitted by Alan - IRA critic on Mon, 2024-09-09 10:56
There is no holding period for a conversion from a SEP IRA, but SEP contributions are pre tax. With a typical back door Roth conversion, a non deductible TIRA contribution is made when there is no pre tax balance in any other IRAs, and the conversion is therefore tax free. If you convert either from a SEP IRA or when there is a pre tax balance in the SEP IRA, the conversion will be mostly taxable.