On the other hand, you currently have to pay regular income tax on the distribution from your traditional IRA. Transferring the Simple IRA to the 401k is tax-free, and you can make the Roth conversion anytime. Since my account is not deductible, i.e. the process of switching to Roth IRA, there is no need to withhold federal taxes on the conversion amount. Had Bentley carried out this conversion and had not been aware of the tax liability, he would have to review the rules for recalculating his Roth IRA to avoid those taxes.
I have a quick question, I’ve just set up a non-deductible IRA account and am planning to switch it to Roth IRA (Backdoor Roth). A backdoor Roth IRA may be right for you if you want to contribute to a Roth IRA but earn too much money for the tax year in which you want to contribute. Otherwise, you’d have to wait until you part ways with your employer and rollover and switch to an external Roth IRA. As for converting RMDs, this is one of the Roth limitations, meaning that you can’t convert RMDs.
Now I have to find a way to supplement an existing Roth that hasn’t met the 5-year rule. It shouldn’t be a problem Dave, one is a contribution, the other is a conversion of existing IRA money.
