Question about backdoor roth IRA...

[purbeast0]

I have not been contributing to my Roth IRA in some years since we went over the allowed limits and I'm finally looking into getting it in there now as a backdoor IRA and had a couple questions.

I was looking at this page here since I have a Vanguard account already:

Backdoor Roth IRA 2022: A Step by Step Guide with Vanguard - Physician on FIRE

A step by step guide that shows you how to successfully complete a Backdoor Roth IRA contribution via Vanguard in 2022 (for a mutual fund or brokerage IRA).

www.physicianonfire.com

So 2 quick questions...

1. Is there still the limit of $6000/yr when doing this?

2. A little bit down on that page in the "Before Attempting a Backdoor Roth" section it mentions that if you already have a traditional IRA in your account, that you have to move the money elsewhere. On Vanguard, I only have a Roth IRA and then a Rollover IRA. Is the "rollover IRA" considered the traditional IRA they are talking about and will I have to move that elsewhere before trying to do the backdoor IRA?

I think that is it for now, thanks.

 

[s0me0nesmind1]

I have not been contributing to my Roth IRA in some years since we went over the allowed limits and I'm finally looking into getting it in there now as a backdoor IRA and had a couple questions.

I was looking at this page here since I have a Vanguard account already:

Backdoor Roth IRA 2022: A Step by Step Guide with Vanguard - Physician on FIRE

A step by step guide that shows you how to successfully complete a Backdoor Roth IRA contribution via Vanguard in 2022 (for a mutual fund or brokerage IRA).

www.physicianonfire.com

So 2 quick questions...

1. Is there still the limit of $6000/yr when doing this?

2. A little bit down on that page in the "Before Attempting a Backdoor Roth" section it mentions that if you already have a traditional IRA in your account, that you have to move the money elsewhere. On Vanguard, I only have a Roth IRA and then a Rollover IRA. Is the "rollover IRA" considered the traditional IRA they are talking about and will I have to move that elsewhere before trying to do the backdoor IRA?

I think that is it for now, thanks.

1. Yes, the limit is "still" $6,000/yr (without catch-up contributions). I say "still" because that actually changed this year. Previously it was $5,500 and is subject to adjust just like 401k max's and such every year by the IRS. Also keep in mind, just like 401ks that is $6,000 per person. So you can also do another $6,000 for your spouse if desired.

2. Not sure what a "rollover IRA" is, maybe someone else can answer that... I've never heard of such a term anywhere..


Before committing to the backdoor ROTH, may want to consider if it's possible for you to do a Mega Backdoor ROTH. This is limited to only certain offering from certain 401k providers... however, I feel it's definitely worth looking into.

 

[purbeast0]

1. Yes, the limit is "still" $6,000/yr (without catch-up contributions). I say "still" because that actually changed this year. Previously it was $5,500 and is subject to adjust just like 401k max's and such every year by the IRS. Also keep in mind, just like 401ks that is $6,000 per person. So you can also do another $6,000 for your spouse if desired.

2. Not sure what a "rollover IRA" is, maybe someone else can answer that... I've never heard of such a term anywhere..


Before committing to the backdoor ROTH, may want to consider if it's possible for you to do a Mega Backdoor ROTH. This is limited to only certain offering from certain 401k providers... however, I feel it's definitely worth looking into.

Like in Vanguard under my accounts, it shows my 2 accounts. 1 is Roth IRA and the other is Rollover IRA, which comes strictly from my 401k at previous jobs.

And yeah I saw that the limit just changed this year from $5500 to $6k. When I first started contributing it was $5k I think.

 

[zinfamous]

I have not been contributing to my Roth IRA in some years since we went over the allowed limits and I'm finally looking into getting it in there now as a backdoor IRA and had a couple questions.

I was looking at this page here since I have a Vanguard account already:

Backdoor Roth IRA 2022: A Step by Step Guide with Vanguard - Physician on FIRE

A step by step guide that shows you how to successfully complete a Backdoor Roth IRA contribution via Vanguard in 2022 (for a mutual fund or brokerage IRA).

www.physicianonfire.com

So 2 quick questions...

1. Is there still the limit of $6000/yr when doing this?

2. A little bit down on that page in the "Before Attempting a Backdoor Roth" section it mentions that if you already have a traditional IRA in your account, that you have to move the money elsewhere. On Vanguard, I only have a Roth IRA and then a Rollover IRA. Is the "rollover IRA" considered the traditional IRA they are talking about and will I have to move that elsewhere before trying to do the backdoor IRA?

I think that is it for now, thanks.

yes, your rollover IRA is a traditional IRA. "rollover" means you can rollover your funds from any 401k or any other tax-deferred plan without penalty, which makes it a traditional IRA.

I have the same "rollover" IRA which I used to consolidate various 403b accounts from previous employers.

 

[purbeast0]

yes, your rollover IRA is a traditional IRA. "rollover" means you can rollover your funds from any 401k or any other tax-deferred plan without penalty, which makes it a traditional IRA.

I have the same "rollover" IRA which I used to consolidate various 403b accounts from previous employers.

So then I would have to move that money into another before I can contribute money into a traditional IRA on Vanguard before I could convert it to a Roth IRA?

I know that behind the scenes it is a "traditional" IRA, but I'm just wondering if Vanguard differentiates a rollover versus just contributing money to a traditional one.

Like can I open a "traditional IRA" in Vanguard and then I will have my roth, rollover, and a traditional?