Back door Roth conversion

Submitted by Robert Roselli on Thu, 2020-02-06 19:38

I have a client that wants to make a back door Roth conversion of $ 7,000. He has an IRA right now but is planning to transfer that into a solo 401K. Will he be able to do this or is he disqualified because he still has an IRA?



Submitted by William Tuttle on Thu, 2020-02-06 20:04

  • Any pro-rata taxation is only based on Form 8606 Line 6 (pre-tax balalnces in all traditional, SEP and SIMPLE IRA accounts) on 12/31 of the year a Roth conversion is done.
  • If any pre-tax balance are rolled over by 12/31 there is no problem.
  • However, since recharacterizations of Roth conversions are no longer allowed. The safest thing to do is to do the pre-tax rollover first and verify its successful completion prior to doing any Roth converison.

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