What is a "backdoor" Roth conversion?
A Roth Conversion is transferring a balance from a Traditional IRA into a Roth IRA. Roth conversions are especially common for those with high incomes that exceed the IRS income limits to contribute into a Roth IRA.
*There are No income limits for Roth Conversions
** IRS Roth IRA contribution income limit - Link
Reasons for doing a Roth Conversion
Take advantage of tax-free growth & withdrawals in retirement
Roth IRA’s aren’t subject to RMD rules. Account continues to grow tax-free
Ability to lower taxable income in retirement
Roth Conversion Deadline
End of Calendar year - December 31st
*Per the Tax Cuts and Jobs Act in 2018, a Roth Conversion cannot be reversed, or recharacterized.
Roth Conversion - Tax Impact
All pre-tax amounts converted are reported as ordinary income in the year the conversion occurred.
Roth Conversion - Tax Forms
Form 1099-R - Apex reports the distribution from the Traditional IRA, showing the amount converted as taxable income. (Delivered in January/February)
Form 5498 - Apex reports the funds received into the Roth IRA. (Delivered in May/June)
Ready to get started?
Please follow our easy steps below:
Open both, a Traditional IRA and a Roth IRA via the app, if you haven’t done so already. (Click Account tab >> Account >> Open a new account)
Fund your Traditional IRA
Let us know the amount you'd like to convert by reaching out to us via chat or firstname.lastname@example.org
Nothing else is required on your end. We'll work with Apex, our broker-dealer, in processing your Roth conversion.