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My income increased in 2020 beyond the Roth IRA income maximum after I had already made my contribution for the year. I know from seeing this question asked before that it's relatively straightforward to correct the overcontribution by having some of it "reclassified" from a Roth into a regular IRA. But do I need to factor in gains on that contribution or am I just able to work with the base figure?
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Mar 28, 2021 14:01
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| # ¿ May 22, 2024 18:55 |
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Gazpacho posted:Until the due date of your return (with extensions), you can request that the IRA custodian recharacterize from a Roth IRA to a traditional IRA the difference (calculated by you) between the total amount that you contributed and your Roth contribution limit for the year. The custodian should calculate the earnings attributable to the contributions and include them in the recharacterization. The contributions are then treated as if they were originally made to the traditional IRA. See Pub. 590-A, "Recharacterizations." If you do not have a traditional IRA with the custodian, then this will involve creating one. Got it, thanks. I only made one contribution and I have the Roth and a rollover traditional IRA with Fidelity, so seems like it should be straightforward. Just had to bail after waiting for an hour on hold with phone support, but seems that they do have a standard form.... https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/ira-recharacterization-request.pdf
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Mar 28, 2021 22:30
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caluki posted:Got it, thanks. I only made one contribution and I have the Roth and a rollover traditional IRA with Fidelity, so seems like it should be straightforward. Just had to bail after waiting for an hour on hold with phone support, but seems that they do have a standard form.... https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/ira-recharacterization-request.pdf I completed the recharacterization and asked Fidelity if they would generate a new Form 5498 to reflect it. They said: Fidelity posted:You will not receive new or revised tax forms. The Recharacterization is reportable in the year it took place. Therefore, you will receive the tax forms for the Recharacterization for the year 2021, next year. But it's still applicable to tax year 2020 when the original contribution was made, right? I wasn't covered by a 401k (or other retirement plan) at work in 2020, so I think the amount recharacterized as traditional should be deductible on my 2020 taxes, but want to confirm that that's correct.
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Apr 17, 2021 20:00
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Very basic Roth IRA question, but just want to make sure this is correct: If you had a gross salary of 149k, and plans to max a traditional 401k (20,500) in 2022. MAGI would be reduced to 128.5k and therefore below the 129k limit to also a max a Roth IRA without the need to backdoor. Right?
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Jan 22, 2022 13:58
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I have a rollover IRA with Fidelity from an old 401k. I want to move that to my current employer 401k to clear the way for making a backdoor Roth IRA contribution. My current employer 401k allows this. I am almost positive this is the case, but there's nothing taxable about this transaction, since it's just one pre-tax account to another, correct? It will just require requesting a check from Fidelity and then sending it on to my current 401k provider?
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Sep 6, 2023 14:51
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Lazy_Liberal posted:it's a pain in the rear end dealing with checks and of course my old 401k sent two of them directly to my house. rip Yeah unfortunately it looks like I have to deal with a check, which seems odd since both providers are huge (Fidelity->ADP). And I have to receive it directly and then mail it on...
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Sep 7, 2023 15:25
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I'm looking at a potential new job with the retirement plan described below. Is this just saying there's a 403b with the [10 / 15] match and they'll autoenroll at a baseline employee 3% contribution but you can contribute up to standard IRS limits? Or is the SRA something separate/additional from the 403b?Retirement Plan posted:
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Sep 9, 2023 11:53
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caluki posted:Yeah unfortunately it looks like I have to deal with a check, which seems odd since both providers are huge (Fidelity->ADP). And I have to receive it directly and then mail it on... I'm now at the phase where Fidelity has cut the check and I have a zero balance Fidelity rollover IRA. The main impetus for this was clearing the IRA in advance of making a backdoor Roth contribution. Can I use that existing IRA account to do a backdoor Roth, or should I just close the account and create a new one specifically for that purpose?
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Sep 15, 2023 12:02
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With a backdoor Roth conversion, what matters is that you don't have a traditional IRA balance at the time of the conversion, correct? I completed a rollover of my Fidelity traditional IRA into my current job's 401k a couple of weeks ago. Just want to confirm that it isn't a problem that I had a traditional IRA balance earlier in the same tax year before I make a backdoor contribution to my Roth.
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Oct 13, 2023 16:13
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If I have to park cash for a while, is there any reason not to use Fidelity's premium money market fund (FZDXX) over SPAXX? I guess it invests a bit less heavily in U.S. Government securities, but other than that the yield is slightly higher and presumably the main barrier from it being a standard recommendation is the 100k minimum purchase.
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Dec 6, 2023 11:56
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I did a backdoor Roth conversion last month using Fidelity. For some reason I couldn't complete it online and had the call Fidelity so they could process the conversion from traditional IRA to Roth on their end. That was fine, but meant the $6500 sat in the traditional IRA account for slightly longer and generated $.89 cents that appeared after the conversion took place. What's the simplest way to deal with that and get rid of the balance? I'm planning to do another backdoor Roth conversion early in the new year.
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Dec 23, 2023 11:35
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Boris Galerkin posted:Just open a regular brokerage account instead, it'll auto buy and liquidate SPAXX. The CMA is only useful if you need a debit card to access an ATM (because they reimburse all ATM fees but only for the CMA). If you really needed that, you can just open a CMA and set it to pull from the brokerage account. I use both since I want the checks and debit card with ATM fee reimbursement (which works internationally). I keep a relatively small balance in the CMA and a larger MMF balance in the brokerage account. Funds moved between accounts are available instantly I believe.
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Mar 20, 2024 21:56
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This may fit more in the income tax thread, but I recall SPAXX coming up here before in terms of state tax treatment. I'm filing with Turbotax and it asks me to "Enter the amount of dividends reported on this 1099-DIV that represents interest from U.S. Government obligations." Is it correct that I can look up the percentage here: https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/TY23-GSE-Supplemental-Letter.pdf SPAXX falls under "FidelityŽ Government Money Market Fund - All Classes* Various 41.18%" And therefore I can enter 41.18% of my 2023 SPAXX dividends to answer that question?
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Apr 2, 2024 01:43
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| # ¿ May 22, 2024 18:55 |
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KYOON GRIFFEY JR posted:You should never contribute to a trad IRA if you ever expect to be over the deductibility limit at any point in your life. That balance will make future back door Roth IRA contributions impossible without a significant tax payment. Unless you're able to roll the traditional IRA into a 401k at some point.
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Apr 12, 2024 13:53
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