Backdoor Roth Conversion

Submitted by Diane Pearson on Thu, 2018-03-15 15:11

We have a client with a Roth IRA and a 403(b) Plan. If we were to contribute to a non-deductible IRA and convert it immediately to the Roth IRA, do you need to include the pre-tax contributions into the 403(b) as part of the taxation calculation? She is also considering contributing to a 457 Plan, but has not done so yet..



Submitted by Alan - IRA critic on Thu, 2018-03-15 15:21

No. The taxable amount of a conversion is calculated on Form 8606 and line 6 of the form must show your year end balance of all TIRAs, SEP IRAs and SIMPLE IRAs. Qualified plans such as 401k and 403b are not included and have no effect on the taxable amount calculation. Neither do the IRAs of a spouse or inherited IRAs for either spouse.

Submitted by Diane Pearson on Thu, 2018-03-15 15:28

Does she have any issues if she contributes to a 457 Plan?

Submitted by Alan - IRA critic on Thu, 2018-03-15 15:32

No, for the purposes of your question consider a 457 as if it were a 403b. Not a factor.

Submitted by Diane Pearson on Thu, 2018-03-15 15:47

Thanks! 

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