The Backdoor Roth IRA conversion is a popular mechanism for wealthy taxpayers to make contributions to their Roth IRAs.
Here is another video on how to calculate nontaxable distributions from a Traditional IRA using Form 8606:
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DISCLAIMER: I am a licensed attorney and certified public accountant (CPA) in the State of Florida. I am not a financial advisor. The information provided in this video is for entertainment purposes only. No such communication is provided in the course of an attorney-client relationship, and no communication is intended to constitute legal advice. You should speak with your own tax and legal professionals to discuss your circumstances before performing any of the tax, legal or accounting strategies demonstrated in this video. This description includes links to affiliates. I may earn a commission or referral bonus if you use these links to purchase products or services from the providers. Thank you.
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Need a video on how to calculate nontaxable distributions from Traditional IRAs?
https://youtu.be/IElAs_Hcw7I
@jason: I tried BackDoor IRA this year. i opened new Tradional IRA and RothIRA accoutns. Moved money from Bank to Traditional IRA. The Amount is settled and ready to trade on the same day of moving money from bank, however I couldn't convert to RothIRA yet because Fidelity team says the amount 6000$ should be in Available withdraw status. I initiated this on Jun 1st and expected Withdraw status is on Jun 8th. Until then the amount is Idle in Traditional IRA. Does this earn any interest ? should i need to worry on anything here ? Shall I move interest if any interest earns ( say example 0.40 $ ), as per RothIRA contribution it is going to be 6000.40 $ >6000$ right. is there any consequence of 0.40 $
Understand that this scheme is only worthwhile if you have ZERO money in ANY traditional IRAs. Look at line 6 on Form 8606. If you have ANY money in ANY traditional IRAs (not just the one you put the rollover amount into) you will be penalized by the ratio of the amounts of traditional IRA to Roth conversion you perform. For 99% of people this Roth rollover conversion process is NOT worth the effort, you will wind up paying taxes twice – once on the income you generate, and once again for the conversion, because the IRS considers that you are converting only a part of the totality of your regular IRA. Only if all of your regular IRAs are empty does this conversion make sense.
I have a recurring back door transfer set up on my payroll account. However it shows a few hundreds of taxable income on my 1099-r, why is that?
does anything change if I converted $12000 last year? one year I forgot to convert, so now my 1099-R states $12000 and my accountant thinks $6000 of it is taxable
Great video!!
Thank you!!
can you also make a video on filing 1040x if you forgot to report it on REGULAR 1040 RETURN? THANKS!
Thank you so much. You have explained so easy and I can finally grasp the idea. Thank you