Roth IRA and 403b Roth Conversion

Investing
#1

Hey! I am a newbie to investing. Just watched your free recorded course on how to invest in index funds. I just opened my Roth IRA with Fidelity today and contributed $6000 for the 2021 contribution year. Can I also make another contribution of $6000 at the same time for the year 2022?

I also have a 403b with a different company (Transamerica) through my job (which will end in June 2022) with about $18K in it. Can I transfer all of these funds to a traditional IRA and then transfer to a Roth IRA (Backdoor Roth IRA??)? Or I can’t? Would I have to fill out form 8606 if I am able to do this? Are there any tax implications to this? I’m confused since I am still brand new to all of this so thank you for your patience.

#2

Hi @moemoney786,

Welcome to the PFC community!

To your first question: Yes, you can contribute up to $6,000 into your Roth IRA for 2022 anytime between today and the tax deadline next year (April 15th, 2023).

Your second question depends on a few variables. I do think it’s important to consult with a CPA prior to taking action. Here are a couple of high level thoughts from me:

  • Yes, you can roll your 403b into a traditional IRA once you leave your current employer. This will not trigger any taxes, assuming it’s done properly.
  • What you described is less so a Backdoor Roth IRA and more of a Traditional to Roth IRA conversion. This will be a taxable event (both ordinary income and cap gains, assuming you have gains in the 403b).

I hope this is helpful. Let me know if there are any other questions!