16 Comments

1. 

   Jaysa Perez on September 17, 2022 at 9:43 am

   Thank you for all you do. I have a question on "CONVERTING TO ROTH FROM NONDEDUCTIBLE IRA WITH LOSSES". I have all non-deductible ira contributions that I want to convert to Roth but the market dropped and it is worth less than my contributions. is it a good idea to covert to Roth? what happens with the losses? thank you in advance!

2. 

   Vinay Jain on September 17, 2022 at 9:43 am

   Nice explanation. However even if you are keeping the separate account for deductable and non deductible part, in non deductable again it's going to grow and would have two parts to it – one part where you would not be paying any tax, another where you would. So in any case you need a complete tracking.

3. 

   L Alexander on September 17, 2022 at 9:43 am

   Okay, so, if the non-deductible means what it means, and the growth is taxable anyway, why can't I just invest that 6k on a normal taxable account like where I buy regular stocks? Does having a non-deductible IRA shelter me at all when it comes to capital gains tax? I'm trying to understand the benefit for all that pro-rata fiasco. Thank you!!!

4. 

   Clarence Lee on September 17, 2022 at 9:43 am

   Hi, if I'm able to roll my trad IRA too a new 401k, then contribute to a non- deductible IRA for purpose of backdooring it will the pro rats rule still apply?

5. 

   Kyrillos Eskander on September 17, 2022 at 9:43 am

   great video, really helped clarify pro-rata rule. Does the money in your 401/403 come into play when making your pro-rata calculation? Or is it only the money in your traditional IRA that is used to calculate the pro-rata rule?

6. 

   Mr A. on September 17, 2022 at 9:43 am

   If you are above the income limit to contribute to a Traditional IRA are you able to contribute to Roth IRA(6,000) and a nondeductible IRA(6,000)? My thought/approach would be to convert the nondeductible amount to a ROth IRA.

7. 

   Ajay Sharma on September 17, 2022 at 9:43 am

   If one has multiple traditional IRA accounts (deductible contributions) at different locations and create separate traditional IRA account for non-deductible contributions for accounting clarity; does he has to convert all the IRA accounts to ROTH IRA (backdoor) if he choose to go that way or he can just convert his traditional IRA account with non-deductible contributions?

8. 

   Maddy Maddy on September 17, 2022 at 9:43 am

   Great Video. One question here.

   I have a traditonal deductible IRA from 2012-2016 , i made a 25k contribution. I stopped contributing after that as i changed my job and have a 401k.
   in 2020, i have more disposable income so i decided to start a non deductible ira and then change into roth. via backdoor. The amount will be 5k

   So as per pro rata rules, the tax i need to pay this year, will be 5k/30k ?? right

9. 

   Ergin Artesia on September 17, 2022 at 9:43 am

   Clear as mud. Thank you though.

10. 

    Phuong Le on September 17, 2022 at 9:43 am

    Thanks. Wonderful video as always. I have been contributing to a non-deductible traditional IRA for 5 years now and wanted to convert to a Roth IRA. My question is: should I make the conversion to a Roth IRA and pay the 10% penalty all at once (there is about 55k in the account) or is there any advantage to doing it slowly over a certain amount of time?

11. 

    dec1slh on September 17, 2022 at 9:43 am

    If you do a backdoor roth conversion at the beginning of the year. Then later in the year you leave your employer and rollover your 401k to traditional ira, would pro rats rule apply for that year?

12. 

    John May on September 17, 2022 at 9:43 am

    Thank you! This helped me finally understand the pro-rata rule.

13. 

    Varun Tambi on September 17, 2022 at 9:43 am

    Thanks for the great video. Could you please explain what is meant by "Spouse MFJ" income under deductible income and how this is different than MFJ?

14. 

    Saibu Shayer on September 17, 2022 at 9:43 am

    LOVE THESE VIDEOS! Thanks for the easy, detailed, and concise explanations!

15. 

    Will Peterson on September 17, 2022 at 9:43 am

    I'm a bit skeptical about your recommendation to keep separate tIRAs to help with record keeping. Even if you start out with one dedicated to deductible (taxable upon conversion) contributions, and one for non-deductible contributions (non taxable upon conversion), they won't stay that way. First, any earnings that you make in the account with non-deductible after-tax money are actually taxable. So that account will be mixed. Second, let's say you convert all of money in the account with your non deductible contributions to Roth, and get hit with the pro rata rule. This leaves you with some non taxable "basis" behind, which is in the only account you have left: the one with the deductible contributions.

    So try as you like to keep the type of money isolated to their own accounts for record keeping, it won't stay that way. It's best to think of ALL your IRA as a single pool of money to avoid confusion.

16. 

    Debra Moreschini on September 17, 2022 at 9:43 am

    Thanks for picking my question! Your boards really help.