Personal Investments • Implications on contributing to a Roth IRA when using a Roth 401K

Welcome to the forum.

1. We’d like to contribute to a Roth IRA this year and will need to use the backdoor method due to income limits. Are there any concerns we should have regarding the Pro Rata rule or other tax implications, considering we already have a Roth 401(k) with our current employer?

No. These systems are independent of each other.

2. If we later decide to roll over the previous company 401(k) into a Rollover IRA or Roth IRA, could that decision affect either the Roth IRA contributions we’re considering for this year or the Roth 401(k) we already have? This is more of a future-planning question to understand any potential complications.

There would be no effect on the Roth 401k. However, if you plan to use the backdoor Roth procedure, do not roll anything into an IRA before the end of this year as that will trigger pro-rating and defeat the purpose of the backdoor Roth action. If you are willing to stop using the backdoor Roth procedure after this year, you can rollover into iRA after this year ends.

3. My wife is a homemaker. Is she eligible to contribute to her own IRA and then convert it to a Roth IRA, even though she doesn’t have earned income?

Yes. She can contribute based on your income. But again, if she has an IRA (other than inherited) it would interfere.

Statistics: Posted by retiredjg — Thu Dec 12, 2024 8:14 am — Replies 4 — Views 206

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