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Reply to "Consolidating 401ks"
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[quote=Anonymous][quote=Anonymous]Why can’t you convert an IRA to a Roth?[/quote] If you have an outstanding pre-tax IRA, doing annual backdoor Roth contributions where you make post-tax contributions to an IRA, become very complicated because of the "pro rata rule". Basically you end up paying tax on a lot of the conversion amount if your old pre-tax IRA is large. This does not apply if you keep those funds in a 401k. https://support.taxslayer.com/hc/en-us/articles/14776395451021-Pro-Rata-rules-for-Roth-conversions-Backdoor-Roth Because of this many people who do the annual backdoor Roth move make sure they don't have any funds in any pre-tax traditional IRAs. [/quote]
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