Backdoor Roth for Spouse
Would like to complete backdoor Roth for 1 spouse.
Spouse has 1 Traditional, tax deferred IRA with $1500 in it.
Spouse has a Roth IRA.
Spouse has no other traditional IRA assets – or Simples, or Seps.
Can I convert the $1500 IRA to the Roth, to ensure there will be no IRA balances at the end of the year on the 8606? Then, complete backdoor Roth for $6500?
Permalink Submitted by Alan - IRA critic on Thu, 2023-01-12 16:22
You could, but there will be 1500 of taxable income either way. The year ends with 8000 of conversions of which 1500 will be taxable. If the ND TIRA contribution cannot be made very soon, converting the 1500 now will prevent any gains from increasing the pre tax amount above 1500, but if the contribution can be made soon, it would be easier to make that contribution and then convert the entire 8000 as a single conversion. Either way, there will be a 0 balance at the end of 2023.
Permalink Submitted by michael steinebach on Thu, 2023-01-12 16:45
Okay, your way is less complicated. I’ll have her make the contribution and convert immediately. Much less work with the same result ($1500 in taxable income).