After-Tax IRA Contributions and the Pro Rata Rule and Backdoor Roth.
Roth IRA Contribution limits and IRA Deductibility limits.
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I was told by my investment co that since I am retired both Roth and regular Ira are not available for me to start.
If you convert a traditional IRA to a ROTH and pay tax on the distribution, is there a waiting period to be able to draw upon that ROTH? I heard 5 years.
Thank you very much, Lane. Like an angel suddenly coming into my life. May you and all who you hold dear be blessed. I fall into the category you addressed. I love the encouragement to have faith in God. I love the encouragement to believe in longevity, to truly and finally live a fulfilled life. Thanks
Wow, incredibly helpful! Thanks for covering such a specific use case of trying to convert over after-tax TIRA to a Roth. I have this situation and was looking around for answers. Though, 100% of my TIRA is after-tax, so based on pro rata, I shouldn't be tax on the conversion. However, what happens to the capital appreciation amount that occured in the TIRA account over the last few years? Will that portion get taxed?
What about after tax 401k contributions? I have never heard of form 8606?
Well explained
Best video I’ve seen on the concept this far, thanks!
Hi , this is so informative. Thank you. I need your feedback though. My husband and I , both 58,decided to retire early, living frugally. We sold our house , use this money for living expenses until we start collecting Social security at 62. We have no income .We started Roth conversion, year 2020 paying the conversion taxes from IRA funds. (These conversion are our only income)This was a mistake. So this year ,2022, we plan to do our 3rd Roth conversion but will pay the conversion tax out of our savings account. We kept our bracket at 12%. We have enough money to complete the conversion until 2025. By then we are 62. Any feedback?
If I transfer $6k of savings into my Trad IRA prior to the 4/15 tax filing deadline and designate it as a contribution for the prior year and then another $6k as a contribution for the current year, can I then backdoor the entire $12k into my Roth? Or am I only allowed to backdoor $6K per year?
I only had to watch you once to get it, but watched it again anyway to seal the deal. Congrats and thanks to you. I've been trying to understand After Tax ROth Conversions and Pro Rata for years and it didn't make sense. It was because no actually gave me a real life example of how you get After Tax money mixed with Pretax money in the first place. The reason is, I'd never done it. I always calculated to contribute to my 401k roth and traditional accounts and never thought to go over the max per year, so according to what I just learned, I've never mixed pre and after tax money in an account to worry about pro rata rule. Thank you again!
Thank you, clear explanation
Hi, Lane, don't understand how did you come up with the 93/7 conversion tax ratio, can you go a bit deeper? Is it based on how much you contribute then how much it worth at time of conversion? How about the part of company matching $? Thanks.
I'm 49 my husband 54 and we are retired! Living my best life right now with my partner in Springfield. We gathered over $5 million for retirement. Saving and lnvesting lifestyle in Roth/IRA has been our biggest success and made it possible for us this early. I've just stumbled upon this channel,much love♥️
A very thorough analysis and discussion of an often complex matter. You hit every nail on the head.
Care to comment on the option of rolling pre-tax IRA funds into your 401k (if you have one) as a way to avoid the IRA pro-rata rule?