Back door IRA TO ROTH
After establishing back door IRA HOW LONG YOU HAVE TO WAIT BEFORE CONVERTING TO ROTH? For tax purpose are other retirement account 401 or 403 assets need to be accounted along with IRA? Once complete can you transfer to irrevocable trust what are tax issues?
Permalink Submitted by PaulC on Tue, 2024-03-26 18:48
If you are asking how long to wait after making the contribution to the Traditional IRA before making the conversion to a Roth, there is no set period of time that’s required. Some advisors recommend waiting a short period to avoid appearance of circumventing rules against Roth contributions when one is over the income limit, but I think that’s unnecessary.
For purposes of calculating any taxable portion of any Roth conversion, including one for a back door contribution, 401(k) or 403(b) balances are NOT considered. Traditional IRA, SEP IRA or Simple IRA balances are considered, except when an account is an inherited account.
I don’t understand the question about tax issues when transferring to an irrevocable trust. IRAs of any sort cannot be held in a trust. They can only be owned by an individual, i.e. a natural person. An exception is when the original owner dies and the beneficiary is the estate or a trust, but that’s only following the death of the IRA owner and you probably aren’t referring to that.
Permalink Submitted by gautam shah on Tue, 2024-04-02 23:48
Thank you for clarification. About tax and trust if i am owner taking RMD when i pass away best is my spouse continue taking RMD ONLY and when she is passed away i want my grandchildren to equally own account and hold till each of them is 18 years so within 10 year whatever they withdraw will be on there tax bracket. HOW best to accomplish this