Our married filing jointly income was just high enough this year that I felt it was worth it to contribute to a Traditional IRA vs Roth for the first time for the tax deduction. I made one contribution of $6500 in December 2023. I don't have any 401ks, just a Roth IRA and this new Traditional IRA.
We expect our joint income to climb high enough within the next couple of years that neither one of us would be eligible for a deduction with a traditional IRA. (My husband is already not eligible since he has a 401k at work.)
I recently have been learning more about the Backdoor Roth and understand that if I have any balances in a traditional IRA, I would have to convert those before utilizing it. This made me wonder if it is worth it to recharacterize my Traditional IRA contribution this year to set myself up well for backdoor conversions in the future.
I began the process in Fidelity and realized I would need to open a Fidelity Roth (my Roth is currently with Vanguard.) This extra step gave me pause and I'm wondering if it is even worth the trouble - does it really makes a big difference to convert this contribution later vs now?
We are in the 22% bracket and Traditional vs. Roth changes our tax bill by about $1400 I believe. (We have not filed - but my accountant has prepared the return saying that I would convert to a Roth.)
My $6500 contribution is $7110 today.
Would appreciate any guidance on best steps. Thank you!
We expect our joint income to climb high enough within the next couple of years that neither one of us would be eligible for a deduction with a traditional IRA. (My husband is already not eligible since he has a 401k at work.)
I recently have been learning more about the Backdoor Roth and understand that if I have any balances in a traditional IRA, I would have to convert those before utilizing it. This made me wonder if it is worth it to recharacterize my Traditional IRA contribution this year to set myself up well for backdoor conversions in the future.
I began the process in Fidelity and realized I would need to open a Fidelity Roth (my Roth is currently with Vanguard.) This extra step gave me pause and I'm wondering if it is even worth the trouble - does it really makes a big difference to convert this contribution later vs now?
We are in the 22% bracket and Traditional vs. Roth changes our tax bill by about $1400 I believe. (We have not filed - but my accountant has prepared the return saying that I would convert to a Roth.)
My $6500 contribution is $7110 today.
Would appreciate any guidance on best steps. Thank you!
Statistics: Posted by Singer85 — Tue Apr 09, 2024 2:13 pm — Replies 0 — Views 1