Is is possible to take out “rollover funds” from a TIRA?
About 10 years ago, I opened a Traditional IRA account and contributed $6000 in it. I was working for a startup and had no 401K contribution that year.
After that, I started working for another company (say “Company 1”) and started contributing into 401(K). After 5 year, I left “Company 1” and joined “Company 2” and started contributing in the 401K plan Company 2.
Two years ago, I rolled over funds in 401K account of “Company 1” into TIRA. That was a mistake!
Now, I would like to put some money in a non-deductible IRA account and do a backdoor conversion to Roth IRA. However, the large funds in the existing IRA account will increase my taxes, significantly.
Is there a way to remove “rollover funds” from the IRA account? I have all the paperwork to prove the transactions!
If your current employer plan will accept rollovers of pre tax IRA dollars, you could do a direct rollover of your entire TIRA balance less 6000 into their 401k plan. You can then convert the 6000 tax free. It is best to complete the rollover to the 401k before doing the conversion just in case the plan will not accept your IRA rollover (perhaps because it is not a rollover IRA anymore), or you cannot complete that rollover in the short time left this year. You can do this early next year as well, then make your 2020 ND contribution and your 2021 ND contribution, and convert them both at the same time.