This is THE best video explaining the back door ROTH pro rata rule! Thank you!
@WillPeterson
4 жыл бұрын
Yay! Glad it helped you Xinwei!
@jennifersoong1762
4 жыл бұрын
@@WillPeterson Completely agree! I've been reading articles and articles. This laid it out so simply. Thank you!!
@simplynotsmart
4 жыл бұрын
Yeah, this was super helpful. Like Jennifer, I read multiple articles before this, but I'm only finally understanding things now, thanks to this video. Thank you for breaking things down so simply, Will!
@hunterpolvi4470
3 жыл бұрын
I agree-fantastic video.
@timking2600
3 жыл бұрын
+1 really well done TY to the creator.
@griffinjones3173
3 жыл бұрын
You are a very bright young man, Will. You took something ridiculously complicated and made it comprehensible to lay people. Thank you.
@dsmith4140
4 жыл бұрын
You give a better explanation of backdoor Roth’s, and, mega backdoor Roth’s Than any thing else that I’ve seen on KZitem or elsewhere. Thank you so much for the PowerPoint charts and making this easier to understand.
@WillPeterson
4 жыл бұрын
Thanks for saying that! 😊
@MrMertturkoglu
5 жыл бұрын
Can’t believe you don’t have millions of subscribers! The things you’ve been teaching, I have never come across on the internet!
@WillPeterson
5 жыл бұрын
Haha thanks man! We'll get there!
@kallastra
Жыл бұрын
This was so helpful! The most helpful explanation of the pro rata rule and back door roth I have encountered. Now I have an actual understanding. Love how you explained options for those who already have a traditional IRA. Most other videos just tell you not to open one if you intend to do a back door roth.
@carloschang6279
3 жыл бұрын
I’ve read and watched other sources ( Forbes, Morningstar) and yours was the clearest. Kudos.
@WillPeterson
3 жыл бұрын
Thanks Carlos 😊👍
@alishap2428
4 жыл бұрын
I'm a visual learner and this video really helped me understand this concept. I know it's making things harder on myself to contribute to a nondeductible traditional IRA on a monthly basis & convert to a roth every couple of years, but my financial advisor at the time encouraged me to do this. I listened without really understanding. Now I'm trying to convert all the monies to a Roth and navigating the tax forms has been really difficult. My tax advisor was literally clueless (he had no idea what an 8606 form was) so, thanks again for putting your wealth of knowledge out there. It would be awesome if you could fill out an 8606 form with a basis and even how to deal with a recharacterization. For example, when I opened the traditional IRA it was b/c my income exceeded the limits for direct contribution after a raise in the middle of that tax year. Some of my contributions to the Roth had to be "recharacterized" to my traditional to avoid the penalty of over-contributing to a Roth. How do you treat those monies on the 8606? Just an idea and thanks again.
@Kwz024
2 жыл бұрын
This is the best video that I have watched for the pro rata rule. The graphics were very helpful. Thank you!
@naz740
4 жыл бұрын
By far the best video on backdoor mechanics.
@OnASecondGlance
Жыл бұрын
You just started and the way you explained the nuance of how funds going in are already taxed was amazing. Nobody mentions that and you made it clear to avoid confusion. Great job and great video!
@kkzets
4 жыл бұрын
This is amazing Will. I've spent countless hours googling/redditting for this answer and this explains it so clearly.
@WillPeterson
4 жыл бұрын
Thanks! Glad to help!
@dominoez21
4 жыл бұрын
Very helpful, thank you! I’m no longer afraid of converting my entire ira to a Roth, now that I understand this rule.
@RemGb10
2 жыл бұрын
Amazing ability to explain a complex topic. Well Done... Best explainer of pro rata rule on KZitem... Keep up the great work !!!
@lynnlamb83
4 ай бұрын
Thank you so much for the visuals! They were so helpful in understanding this!
@scorpionjo
4 жыл бұрын
WOW! This was simple to understand.
@patmclaughlin107
3 жыл бұрын
Thanks so much! I read several articles, but none made sense. This was extremely helpful and clear. I just realized I owe taxes now, though. 😔
@srinidhiii
4 жыл бұрын
Man!! you are beauty with brains:-)grateful to find ur channel. You have a big heart to share your knowledge
@calculated00
4 жыл бұрын
Already did my back door for this year. Just wanted to know what will happen when I roll over a 401k to IRA later and this video answered all my questions. Thank you.
@joediamondcpa796
Жыл бұрын
I love your IRA videos, but another thing to consider here that you did not mention,,,,,,,,,,you did mention the pro rata rule for PRE TAX monies or additions, but you did not mention that even if all your IRA's were non-deductible, the pro rata rule still applies to the non-deductible earnings! keep up the great work
@LietSayri
2 жыл бұрын
The diagram helped me a lot. Honestly that diagram was a great explanation and finally helped me understand this. Subbed!
@priestesslucy3299
3 жыл бұрын
Thank you so so so much for this explanation. Everyone else makes it seem like the government is artificially penalizing a backdoor roth, but all it's doing is forcing you to convert part of the pre-tax funds as well. Much appreciated
@Annamalaibatsha
4 жыл бұрын
This is the best explanation i have seen this far on this topic great video thanks
@WillPeterson
4 жыл бұрын
That's great feedback, thanks G C!
@jsmoove731
Жыл бұрын
Best explanation of Pro Rata Rule I have ever seen!
@grewalke
4 жыл бұрын
This was perfect. I have a rollover from former employer, about 11k and want to backdoor Roth. I think I will bite the bullet and just convert it all, let it grow tax free from here on out. Thanks for a great video!
@WillPeterson
4 жыл бұрын
Yeah I've come to that conclusion too. It's just so much easier to get it over with and empty out the traditional IRA. Cheers!
@bhavinjambusaria7048
2 жыл бұрын
He is best, very well explained and cleaned all confusion & doubts. Thanks
@matthooper5724
3 жыл бұрын
Simple, clear explanation with applicable examples for different situations. Well done. Thank you!
@premchettri7170
2 жыл бұрын
For sure, this is helpful !! Many professional doesnt know this better. I was asked by one fidelity guy that I can do using second IRA account.. later found out.. that it is not !!
@pinoyh1536
2 жыл бұрын
Wow this really solved my questions that's bugging me for quite some time. Well explained!!! Thank you so much!!
@jFlowers598
Жыл бұрын
Omg finally a clearly explained video on this. Thank you thank you 🙏
@jonpalmer925
3 жыл бұрын
Dude, you made that so easy to understand. Wish I would have found your video first!
@anthonygardner400
3 жыл бұрын
Excellent video! I’ve watched a few videos on the topic, and you explained it most clearly. Thanks!
@knyto2
2 жыл бұрын
Great video, the best explanation I have seen so far about the pro rata rule. One question that I have is what if I have earnings from the Non-Taxable Money in the Traditional IRA. For example I bought some index funds with the Non-Taxable Money and received dividends. Are those dividend earnings considered Taxable Money? Can I still shelter those dividend earnings in the Work 401k?
@TheKiman2
3 жыл бұрын
Wow, such a good explanation! Thanks for going through multiple scenarios and real life examples of how you can have a mix of pre and post tax money sitting in the IRA account - that was the difference maker. And addressing the cans and can'ts - like opening up IRA accounts in multiple brokerages in hopes of circumventing pro rata - really helped with the nuances. Your visuals really helped as well! Great work. Subbed.
@myndfulness
11 ай бұрын
Great explanation --visually did it for me 🎉🙌🏽
@himanshuhome3002
2 жыл бұрын
Extremely well explained. Thank you
@pump8686
5 жыл бұрын
Amazing content! I subscribed after watching your mega backdoor roth ira video. It explains better than madfientist.com. A lot of other videos (credit card churning, and backdoor roth ira, etc) are also very clear and organized. I think the reason why your videos have lower views than the quality is because of the audience. People who watch youtube videos tend to be younger or tech savvy. A lot of them don't care about retirement. They either "think" that they make too little to think about these stuff. Or they "think" that they make too much that they dont need to worry about retirement. They probably need some dicipline lol
@WillPeterson
5 жыл бұрын
Really good feedback, thanks Andrew!
@AdamTheBeekeeper
2 жыл бұрын
Just wanted to say thanks for the graphics. Helped visualize it. Keep up the good work.
@jimbomc4439
3 жыл бұрын
Brilliant simplifying a complicated process !
@yonallb
4 жыл бұрын
Wow, I really wish I wouldn't have done a roll over now. This sounds like a PITA. Thanks for the video.
@lukaszibaitis3853
3 жыл бұрын
This is an INCREDIBLE explanation Will, you've got my sub for it!! Correct me if I'm wrong, but for individuals making >$140,000 (Roth limit) AND work retirement plans, this is the perfect strategy because these people do not qualify for tax deductions with trad. IRA contributions right? For example a physician who gets 403b and makes their salary but has started a Roth IRA years before receiving their large salary.
@WillPeterson
3 жыл бұрын
That's absolutely right!
@BenjaminTVogt
5 жыл бұрын
Great video as always - keep the content coming!
@TravelingtheWorld96
9 ай бұрын
Excellent video....
@oliviajaworek7122
3 жыл бұрын
Thank you for such clear explanation
@davidmathis7780
4 жыл бұрын
Thanks a lot for the video! I was having a hard time understanding this rule until I saw this. So I've learned that I'm not going to do this after all. I have a large amount saved in a rollover IRA (all pre-tax) from a previous employer. If I open a new traditional IRA, fund it with $6k, then immediately convert to Roth, 97% of it will still be considered taxable. All in order just to have a little tax-free income when I retire? Not worth it for me.
@WillPeterson
4 жыл бұрын
Makes sense!
@MrEscape314
Жыл бұрын
Dave, you're right about the process inside that one given event but this video did not address post tax Traditional IRA basis. If only 3% of the $6k was converted to the Roth IRA, then the remaining $5,820 is still sitting post tax in the Traditional IRA. When you retire, that amount is still free of taxes. Conversely, if you do a Backdoor conversion year after year, your basis will grow. The second year, 6% will be tax free and the third year, 9% will be tax free. Refer to page 1 of form 8606 where the IRS instructs you to maintain a log of the basis year on year inside your tax forms. If today is a good year for a Roth IRA, it's probably a good year for a conversion too. So if you do the backdoor, accept that it'll look like double taxation. But you're actually keeping track and the money that sits in the traditional is still post tax money for the rest of your life.
@fredwang2004
4 жыл бұрын
Thank you for the clarification on the rule to take all iras into consideration. And thank you for the 401k alternative solution.
@RockinBarBRanch
2 жыл бұрын
Great explanation of how it works!
@claraserna9377
Жыл бұрын
Great video!! Well explained. Thank you very much 👍🙏😃
@vickyyang6151
3 жыл бұрын
Thank you so much for the video. Clearest explanation on this subject!
@geradokinowata7212
3 жыл бұрын
Awesome just what I was looking for!!!
@RN583764
3 жыл бұрын
Thank you so much for explaining this!! I finally understand this. I’m just in an unlucky situation.
@hannakim0207
4 жыл бұрын
this is the great and best video!! Will, I really had a hard time understanding backdoor roth, mega backdoor roth and pro rata rule. your videos explain everything in easy way. Being a visual learner, I really like the graphs :) Thank you!!!
@WillPeterson
4 жыл бұрын
That means a lot Hanna! Thanks for the kind words
@natebanks1051
5 жыл бұрын
Another really well made video. Great visuals and really easy to understand. Keep it up!
@225TTuned
3 жыл бұрын
Reverse rollover! Best video ever!!
@krishnanit
2 жыл бұрын
Best explanation ever. Thanks for the information 👍
@rosskline.finance
2 жыл бұрын
This is an excellent explanation 👍🏼
@drallens8195
3 жыл бұрын
great explanation-- something complicated made simple. thanks!
@MrCPPG
3 жыл бұрын
Very good easy to understand.
@elementsofthesolows4936
5 жыл бұрын
Great video! Keep up the awesome content. You deserve more subscribers!
@elizabethenglish8557
Жыл бұрын
Thanks - this was incredibly helpful. Am now subscribing to your channel 🙂
@abhaagrawal9149
Жыл бұрын
This was very very helpful
@maxjohnson4248
4 жыл бұрын
Great video, thank you! It was very informative.
@CBigsby
4 жыл бұрын
Thank you!! for putting this together. Very very helpful. It will be great if you can do a example for FORM 8606 for this pro rata rule example.
@WillPeterson
4 жыл бұрын
Hey glad it was helpful! I do walk through an example of form 8606 at the end of this video kzitem.info/news/bejne/tG1r35qkfXp_ZoI but it assumes no pro rata rule for the example. Maybe ill make one walking through that in the future!
@fredwang2004
4 жыл бұрын
Will, Thank you for the great video! I have two follow up questions: 1) I need to roll in my IRA in to my 401k to avoid the pro rata rule, question is, do I have to wait for a year after the “roll in to 401k” event before the backdoor Roth conversion? Can both happen in the same year.? 2) can I do both the backdoor Roth conversion together with the “Mega” backdoor Roth conversion? Thank you for your videos, enjoyed all of them and learned so much!
@WillPeterson
4 жыл бұрын
Question #1, I cannot answer for sure. However, I believe by looking at for 8606, Line 6, it calculates the "denominator" for the pro rata rule based on the balance of your IRAs on Dec 31st of the year. So if you've rolled money into a 401k within the year, it should be "protected" from the role since your balance on Dec 31st will be zero. 2) yes absolutely, these two strategies do not conflict.
@fredwang2004
4 жыл бұрын
really appreciate your reply. Looking forward to more videos from you !
@khongcolong
3 жыл бұрын
LOVE YOUR VISUAL! Thanks for sharing
@needhamav8
4 жыл бұрын
First video I've watched from you..... definitely subscribing to your channel!!
@WillPeterson
4 жыл бұрын
Thanks man! Hopefully it's helpful!
@natf.3338
3 жыл бұрын
Great video!
@hiuwong6746
3 жыл бұрын
Amazing explanation!
@Nick-yn2uz
4 жыл бұрын
These videos are great! Thank you!
@JohnJackson-ny7lx
5 жыл бұрын
Well explained, thanks! Two questions: 1. Do a backdoor conversion- no tax impact. Does this mean that the conversion monies won't be considered as a taxable income? 2. Income is over the allowed limit to contribute to roth. Am I allowed to contribute more than the max limit (2019 - 6,000) to a traditional ira? Let's $8,000.
@WillPeterson
5 жыл бұрын
If all the money in your traditional IRA is post-tax (you never took a deduction for it, and it was included in your taxable income when you earned it), then the rollover will NOT be taxable at all. Nice! However, you should have filed form 8606 in the year you made your non-deductible traditional IRA contribution (as part of your tax return)
@JohnJackson-ny7lx
5 жыл бұрын
Thanks Will.
@WillPeterson
5 жыл бұрын
Also you can still only contribute 6k this way
@rayon20richable
4 жыл бұрын
@@WillPeterson ... I am EA and came across an interesting situation with one of my high earning clients who make upwards of $250K per year and have a question, I am hoping you can answer. My client’s income is above the threshold for deducting traditional IRA contribution. In December of 2019 my client deposited $6000 of post-tax funds into his Traditional IRA Account. Later that month he transferred the $6000 to a Roth IRA and received a 1099-R with Box 1.A showing a distribution of $6000 and Box 2A Showing a Taxable amount of $6000. Does this situation produce a double taxation situation? He already paid tax on the funds he placed into the Traditional IRA and now he has to show the Distribution on is 1040 and pay taxes on the $6000 again. Is this really the case? Is the IRS really punishing high earner this heavy for trying to save for retirement? Is there another way he could have did the transfer to a ROTH without being taxed twice? Thanks in advance for your assistance.
@davidtang1828
3 жыл бұрын
Such a great video! Thank you!
@jenmendez5651
Жыл бұрын
Soo useful! Thank you🎉
@jarcher5997
4 жыл бұрын
Can you do a video on the different types of cost basis? Like First-in-First-out, First-in-Last-out...etc.
@Lollyce747
3 жыл бұрын
Hello, does this mean that if we have never had a traditional IRA, we don't have to worry about the Pro Rata rule because we don't have any pre-tax money? Can we just take the nondeductible money and convert into a Roth IRA without paying any taxes other than filing for income tax later on? Thanks!
@WillPeterson
3 жыл бұрын
Correct!
@voodooredblue
4 жыл бұрын
Nice Video but it leads to the question of how a 457 plan account plays in to the pro rata rule. Please do a video that includes how 457 funds are affected in a similar situation. Thank you.
@ninali9514
3 жыл бұрын
Thanks for the explanation of pro rata rule. If I transfer my Traditional IRA (Pre-tax money) to my work 401k, then contribute $6000 post-tax money, and convert it to back door Roth IRA, and all these are done in 2020. Do I subject to pro rata rule? Or do I need to transfer pretax money this year and contribute post tax money next year to avoid the pro rata rule? Thanks.
@megankeikokasho4794
2 ай бұрын
Great video! I have a few questions: What happens after you move your pre tax money in your traditional IRA account to your 401k? Should you immediately move it back to get your diversity in investment choices? Do you get hit for over contributing to your 401k though since it will be more than the max 401k contribution amount?
@kmandbay
4 жыл бұрын
great video! good visuals
@acockerham01
3 жыл бұрын
Great video! Does the roll in to the work 401k count toward the years contribution limit 19.5 or 57k?
@hornbaker
3 жыл бұрын
No. Rollovers and conversions don’t affect contribution limits.
@mariacastillo6477
5 жыл бұрын
Very clear. Thank you so much!!!!
@helloworld7514
3 жыл бұрын
You have exceptional teaching skills, Will! I have read about this dozens of times but with your visual graphics, everything became clear. I was wondering if you could help clarify how to handle a situation where the pro-rata rule is incurred: Lets say you contribute $6k to tIRA and convert to Roth IRA immediately in January 2020. However, by Dec 31, 2020 you realize that you had an unknown balance of $8k in a traditional IRA account. What taxes are owed for this pro-rata rule and for tax year 2021, if I wanted to perform a backdoor roth contribution, how can I empty the remaining $8k in traditional IRA? My employer allows rollover from traditional IRA to 401k so should I rollover the entire $8k balance in the traditional IRA to 401k? Thanks again for all your help
@WillPeterson
3 жыл бұрын
Basically out of the $14,000 that you actually had in tIRAs, only $6,000 was already taxed. That means when you do a conversion, ~58% of the amount of that conversion will be taxable income. walk through form 8606 line by line for 2020, and this should come out. But what's extra confusing is that now the $8k remaining in your 401k is ALSO a mixture of pre-tax and post tax money. You could probably roll it into your 401k to shelter it, but now you are dealing with both pre-tax and post-tax money. I might bite the bullet and this year, convert ALL your tIRA money to Roth (both the 8k still in there, as well as the new 6k I imagine you will contribute to do the backdoor Roth again). I recommend posting to the "/r/tax" subreddit for more advice on this if you want! easier to have a discussion there than in youtube comments :-)
@alrocky
3 жыл бұрын
@@WillPeterson "extra confusing is that now the $8k remaining in your -401k- [sic IRA] is ALSO a mixture of pre-tax and post tax money. You could probably roll it into your 401k to shelter it, but now you are dealing with both pre-tax and post-tax money." That doesn't sound correct at all! That's still $8k *pre-tax* in a *traditional* IRA.
@zhizhong92
2 жыл бұрын
Wow this is an awesome video. Very clear. Just one question, if I open an IRA account in July and immediately convert it to a Roth IRA account, does the conversion happen immediately it does it wait until December 31st? I was a bit confused at that last point.
@brosephus_rex1374
3 жыл бұрын
You are a god damned hero.
@bidkarsalazar626
3 жыл бұрын
Thank you so much for the hard work you put into your videos. So much easier to understand this stuff. One question if you could answer please. I'm 49 years old. I make over the income limit to open a Roth ira. I have an employer 401k I max out every year. So I can open a traditional IRA, deposit 7k and converted to Roth IRA right away and do that every year?
@WillPeterson
3 жыл бұрын
Yes that's exactly right. I have one or two other videos on the "backdoor roth" strategy, check them out. To clarify your language slightly: there is no income limit to OPEN a Roth IRA account. The income limit restricts you from CONTRIBUTING to a Roth IRA account
@bidkarsalazar626
3 жыл бұрын
Thank you for answering my question. I'll be sure to see your other videos. Happy new year.✨🎆🎇
@mikiaskebede3816
4 жыл бұрын
Thanks for explaining the pro-rata rule in great depth Will. I have a follow-up question. Is it possible to use the back door Roth IRA conversion if one has a defined benefit plan with solo 401k? I am not sure if the money in the defined benefit plan can affect the back door Roth IRA conversion like the money in the traditional IRA does.
@HH-gn9qt
2 жыл бұрын
Can someone please clarify if the "contribution date" is the original date of the contribution, irregardless of a recharacterization? IE, I contributed $6K to a Roth IRA on 2/25/20, but I didn't realize my income was too high until the spring of 2021 when I did my taxes. I recharacterized the original Roth contribution on 4/30/21 to a non-deductible trad IRA. What date do I use as the "contribution date"? Thank you for the helpful video.
@amygarza1571
5 жыл бұрын
So if you have a large amount in your IRA can you convert the Roth max equivalent each year? So 2019 move 6000 as backdoor and 6000 taxable from the IRA? Does this satisfy the rule?
@WillPeterson
5 жыл бұрын
Hello Amy! There is actually NO limit on how much money you can convert from traditional IRA to Roth in a given year. The only limit is on the amount of new contributions you make in a year. So if you start with 6000 pre-tax money in your traditional IRA (from a previous year), and you make a new contribution of 6000 (and don't take a deduction), you could convert all 12,000 over to Roth. (and you would only be taxed on half of it.)
@amygarza1571
5 жыл бұрын
@@WillPeterson thanks for getting back to me. If I have more than 6000 in the IRA can I contribute 6000 NEW and only convert it and 6000 (to be taxed) from the original IRA amount? Or will I have to convert the entire amount IF I make a new contribution? I understand I can move it over in chunks, but I wasn't sure if I could still do this AND make new contributions.
@alrocky
4 жыл бұрын
@@amygarza1571 "will I have to convert the entire amount IF I make a new contribution?" --- No You can convert any amount regardless of how much NEW money to contribute to an IRA.
@jeffchang2728
2 жыл бұрын
Hi Will, first of all, best video on the pro rata rule I've come across. Thanks for sharing the knowledge. May I ask a question related to the rolling in taxable money from a traditional IRA to 401k (~6:24). I have two traditional IRA accounts with different financial institutes. One account contains ONLY taxable money (from IRA CD) and the other account contains ONLY non-taxable money. I'm looking to do a backdoor converting the non-taxable money to Roth IRA. If I were to first roll in all the taxable funds to my 401k, then that leaves me with only non-taxable money in any of the Traditional IRAs. At a later date, can I then backdoor-convert the existing non-taxable money to a Roth IRA without any Pro Rata rule implication? Thank you in advance for your advise!
@wanroo
3 жыл бұрын
Thank you so much Will! I plan to convert my 401k to a n IRA then immediately perform the Roth IRA back door conversion. What is the maximum amount of money I can perform this transaction with? Is it $6000/year or is there no limit?
@MrEscape314
Жыл бұрын
If your 401k is a pretax account, you can rollover to a traditional IRA and then move it to a ROTH IRA, but that isn't a "back door conversion." That is a typical conversion. Currently there is no annual limit on the amount you can convert, but it is a taxable event so be aware that a large conversion will be expensive.
@outtadebtnowwithdianefishe4925
3 жыл бұрын
Question: You said if there is a married couple and only one spouse has an IRA account, it’s only subject to the spouse with the IRA account. Maybe I missed it, but what if both spouses have IRA accounts? Are the spouses, filing jointly, still treated separately? (Thanks for the advice and clear diagram explanations.)
@WillPeterson
3 жыл бұрын
Yes, treated completely separately.
@paulcali08
Жыл бұрын
I have a substantial amount of pretax money in a work 403B and I have a Traditional IRA with post tax money + it's taxable earnings. Because I'm now retired, is doing a reverse rollover into a work 403B even an option? If not, would I just employ the Pro-Rata rule and make whatever Roth conversions I want and pay tax on the calculated percentage?
@Garizel
4 жыл бұрын
you got another subscriber
@WillPeterson
4 жыл бұрын
Awesome dude! Let me know if there's anything in particular you want to see.
@smartnut007
Жыл бұрын
Very informative. But, I kept thinking what a stunningly handsome man he is 🙂
@kohort1
3 жыл бұрын
So I need to catch up on my retirement. I don't get a 401k, but I have an old one rolled into IRA. I need to pay taxes on any growth and non taxes portion of it. My wife on the otherhand should stick all her IRAs into the current 401k. Then open an account and plug $ 6k. Then she in essence can help further us collectively. But that also means that the money she plugs back into her 401k to avoid pro rata rule will not get converted. Does this sound right? We are over all the income limits but she's maxed out her 401k.
@EoeSantinny
4 жыл бұрын
How can you open a Roth if you make more than the limit? i.e. doesn't fidelity, vanguard check your adjusted gross income from last year?
@WillPeterson
4 жыл бұрын
There are no restrictions on OPENING Roth IRA accounts, nor on converting money from traditional to Roth. The only restriction is on CONTRIBUTING new money to Roth IRAs, if you make over the income limit.
@ShayanMerchant
3 жыл бұрын
Are SEP IRAs included in the pre-tax money calculation?
@odkhuu
7 ай бұрын
what if i only have post-tax non deductible contributions from both last year and this year. And I never had any other contributions in the traditional ira. After i do a single converstion, do i need to pay pro rata tax ?
@SalemHomeSolutions-ej3sr
Жыл бұрын
Will, Thank you for the very helpful video. What if theoretically someone has been screwing up the pro rata rule for a few years. Suppose there is a $80K Rollover IRA on Vanguard and every year the filer has used separate IRA account to Backdoor into Roth to the maximum. Would this require doing a 1040X for every year, starting at the beginning, to track the right basis? Or could this individual take the tax hit now, convert everything to Roth, and effectively “fix” the situation, albeit shouldering a hefty tax bill? How would filing sequential 1040X forms work? Processing times are long and the basis needs to be carried through each year, so it seems even impractical to “fix” this with 1040X if this has been an error let’s say for 2-3 years historically? Also assume one wouldn’t simply be able to move the Rollover IRA to new employer 401k to fix this either, given the pro rata errors made historically? Thank you.
@WillPeterson
Жыл бұрын
Oof. This theoretical, hypothetical situation is a bit outside my expertise. I'd make a post on www.reddit.com/r/tax . Lots of accountants and tax experts willing to give free advice there.
@taylorshouse7824
3 жыл бұрын
Thank you. Does this pro rata apply the same for SIMPLE Ira money?
@osalas36
4 жыл бұрын
Does the "roll-in" done at ~7:11 count towards contribution limits of 401ks? (I'm assuming probably not since in your example it was a rollover of 200k but just making sure!)
@WillPeterson
4 жыл бұрын
Nope it does not!
@lrgopal2009
Жыл бұрын
Excellent video. Does this Pro Rata rule apply to Mega backdoor roth conversion?
@WillPeterson
Жыл бұрын
Nope, with the mega back door, the money has always already been taxed, and never touches a "pre tax" ("traditional") account.
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