![]() ![]() ![]() Look at the Form 8606 instructions to see that Trad IRA, SEP, and SIMPLE IRA are lumped together for purposes of a conversion Pro Rata computation. Get students up to speed with budgeting, credit scores, savings, and more using Mint. It's not considered distribution but it is partially taxable. Teach personal finance basics with Mint Help students take control of their finances and their futures. "and the conversion of the new traditional IRA that they opened this year will be considered distributions as part of the pro-rata rule/ “cream in your coffee” rule." However, I did not receive the 240 tax credit that was suggested by TT. I entered the information as you have suggested above. I funded 5,500 into it, and it was fully funded from my bank account. "Their concern is that the Simple IRA will be considered to be a traditional IRA or 401K by the IRS" TurboTaxIrene: I opened a SEP IRA through the website, from HonestDollar (aka Goldman Sachs). A SIMPLE IRA would be a No Basis, Never Taxed, amount. There will be prorated taxes, based on that Nondeductible amount against all never taxed amounts. Will they be responsible to pay taxes on the conversion of the traditional IRA to the Roth IRA?"Ī person can't do Backdoor that is tax free if there is pre-tax and never-taxed money in a similar type of account, such as what you see on Form 8606. "They contributed 12k for each of them into the backdoor Roth IRA (6k for 2021 and 6k for 2022). There is no Joint event for retirement activities. The Simple IRA has a cost basis of $5,730 and market value of $13,844." "and contributed post tax dollars to it and then converted it to a Roth IRA. Pre-taxed contributions and employer matches are not Basis. ![]() Personally, I don't care about anything but the bottom line: What do I need to open with Mint/where on the site, how much do I have to invest immediately or by the cut off (April), and how long must I wait to a) be approved and b) acquire that 5500 deductible to weigh against. It is different than Traditional IRA (which is not done through an employer) and different than 401(k) plans. I'd already been considering opening an IRA, but it's all Latin to me and there's an overwhelming number of options. The word "SIMPLE" means "Savings Incentive Match Plan for Employees" and does not mean "basic" or "plain." It does not mean generic, either. Everything You Ever Wanted (or Needed) to Know about IRAs. "The Simple IRA has a cost basis of $5,730" Categories: Uncategorized Tags: student loans, Mint, intuit, Mint blog, spending your student. ![]()
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