backdoor roth ira contribution / conversion if covered by a SIMPLE

Submitted by Michael Neuenschwander on Wed, 2023-01-18 16:20

If someone is covered by a SIMPLE plan at work, can they still do an outside nondeductible IRA contribution and then convert only their outside IRA to roth; or does the SIMPLE plan get thrown in to that roth conversion calculation under the attribution rules?

ie for a 401k is clear that the 401k is not an IRA and thus they can convert only their outside IRA and not have to worry about the balance in the 401k, but I can’t find anything clear about a SIMPLE plan.

Also, while there are Roth 401k options, I don’t see where a Roth SIMPLE exists, is that correct?

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Permalink Submitted by Alan - IRA critic on Wed, 2023-01-18 16:45

All owned non Roth IRA balances, which include SEP and SIMPLE IRAs are factored into the taxation of distributions and conversions. The SIMPLE IRA balance would then increase the taxable portion of the Roth conversion. See line 6 of Form 8606.
SIMPLE Roth IRA accounts did not exist in the past, but Sec 601 of Secure Act 2.0 authorizes such accounts starting this year. However, the IRS will have to publish Regs for this and custodians will have to develop supporting systems before such contributions can actually be made, so more likely this will not be a reality until 2024.