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Financial Planning / Tax Strategies
|Subject: Re: NonDed IRA to Roth IRA & Old 401K to Rollove||Date: 12/14/2012 2:25 AM|
|Author: TMFPMarti||Number: 117131 of 125005|
I contributed max allowed $5000 to Non-Deductible IRA with after-tax money in Jan 2012 and then immediately converted all $5000 to Roth IRA. Non-Ded IRA had no funds prior to this. This is sort of backdoor way to contribute to Roth IRA if you are not eligible to contribute directly to a Roth IRA.
Then in Mar 2012, I rolled over my old 401K (previous employer - pretax money) to a Rollover IRA. Will this activity have any tax implications given that I did a Roth conversion earlier in Jan 2012. If yes, can I undo this 401K rollover or can I transfer rollover IRA to my current 401K plan with current employer?
In order, yes and maybe.
When you do the calculation of the taxable/nontaxable portions of the conversion you look at 12/31/2012 traditional IRA balance. See Form 8606, part I.
Your current employer can, but is not required to, accept a rollover into your current 401(k). Before you do so, make sure you really want to do it.
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