BACKDOOR ROTH IRA CONVERSIONS AND THE ANNUAL RMD REQUIREMENT: TODAY’S SLOTT REPORT MAILBAG
Question:Is it possible to do a Backdoor Roth IRA conversion with a SEP IRA? If yes, how does it work?Thank you!Yulia
backdoor Roth IRA
Backdoor Roth IRA Baggage
We hear it all the time. “If your income is too high for a direct Roth IRA contribution, just do a Backdoor Roth. Easy-peasy!”Not so fast, my friend. A Backdoor Roth IRA transaction is like a musclebound hotel bellhop – it can carry a lot of baggage. However, before we can discuss said baggage…
The Back-Door Roth Strategy and Spousal Beneficiaries: Today’s Slott Report Mailbag
I earn too much money and can’t do a Roth IRA. I have heard about the back-door Roth IRA strategy for those who earn more than the allowable contribution for the Roth IRA where they contribute to a traditional IRA and then roll over to a Roth IRA.
Inherited IRAs and Roth Conversions: Today’s Slott Report Mailbag
Question:I inherited an IRA in 2022 upon the passing of my father after he had already started his RMDs. I took a 2023 RMD from it in May 2023. Your website says I’m not required to take this RMD. I called the custodian to reverse it, but they said it can’t be done. Is this true?
Backdoor Roth IRAs and Beneficiary RMDs: Today’s Slott Report Mailbag
Question:Hi,I have a question regarding solo 401(k)s. Does a solo 401(k) contribution affect the pro-rata rule when considering a backdoor Roth IRA?Best,James
Inherited Roth IRAs and Backdoor Roth IRAs: Today’s Slott Report Mailbag
Question:Greetings,There seems to be a lot of conflicting information on Inherited Roth IRAs, for which I was hoping to get a definitive answer from the experts.My understanding was that a non-spouse beneficiary (who is not an eligible designated beneficiary), who inherits a Roth IRA wouldn’t be subject to annual RMDs but would be subject to emptying the account within 10 years of the original account owner’s death (for account owners who died after 2019, that is). I thought this exception was predicated on the original account owner of a Roth IRA not being subject to a required beginning date (RBD).
Self-Directed IRAs and the Backdoor Roth: Today’s Slott Report Mailbag
Question:Is there a required minimum distribution (RMD) on a self-directed IRA?Answer:A “self-directed IRA” is nothing more than an IRA that invests in unconventional items that not all custodians will handle – like maybe crypto currency, real estate, or a hard-to-value assets. Otherwise, self-directed IRAs follow the same rules as every other IRA. As such, yes, self-directed IRAs do have RMDs.
Is it Safe to Use the Backdoor Roth Now?
We continue to get questions about whether it’s wise to do a Backdoor Roth IRA or Mega Backdoor Roth IRA at this point, given the unsettled state of the Build Back Better (BBB) legislation in Congress.As background, the Backdoor Roth IRA strategy allows you to make an indirect Roth IRA contribution if your income is too high to qualify for a direct contribution. (The income phase-out ranges for 2022 are $204,000 - $214,000 for married couples filing jointly and $129,000 - $144,000 for single filers). You simply make a traditional IRA contribution and then convert it to a Roth IRA. (No income limits apply for making traditional IRA contributions, but you must have taxable compensation or earned income.)
What’s the Status of All Those Congressional Retirement Proposals?
During 2021, Congress has taken up a number of different retirement proposals, and it’s been difficult to keep track of them. Here’s an update of how things stand at the moment. Of course, new developments could occur at any time, so stay tuned.
Congress Looks to Eliminate Back-Door Roth Strategies
The House Ways and Means Committee has released a draft of proposed changes to retirement accounts, including adding income limits for conversions and eliminating the back-door Roth conversion strategy. These proposals are designed to raise revenue and are likely, at least in part, a response to recent headlines about large Roth IRAs held by billionaires. Unless otherwise noted, the proposals would be effective for 2022. Here is what this means for your retirement account.
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