New To Investing Thread

[Stupid Fitz]

I'm a dumbass and should have been doing this for a while, but i've got some excess cash and I'm thinking about a backdoor roth for Mrs SF. I'm doing it for her because I have an IRA that I don't want to mess with or deal with converting, transferring, taxes, etc. She doesn't currently have one so that seems easier. From what I gather, I just open a traditional IRA at Vanguard, fund it, buy whatever index fund, and then convert it. This all seems pretty easy, but as you have seen from the travel and credit card threads, I somehow make easy stuff way more difficult than it is supposed to be. Am I going to mess this up and should I not try this at all and just keep funding my taxable stuff? TIA

['taterblast]

don't buy a fund until the money is in the Roth

1. open Traditional if needed
2. open Roth if needed
3. put money in Traditional account
4. as soon as possible, transfer all of that money from Traditional to Roth account
5. invest that money within the Roth account

[steve dave]

I'm a dumbass and should have been doing this for a while, but i've got some excess cash and I'm thinking about a backdoor roth for Mrs SF. I'm doing it for her because I have an IRA that I don't want to mess with or deal with converting, transferring, taxes, etc. She doesn't currently have one so that seems easier. From what I gather, I just open a traditional IRA at Vanguard, fund it, buy whatever index fund, and then convert it. This all seems pretty easy, but as you have seen from the travel and credit card threads, I somehow make easy stuff way more difficult than it is supposed to be. Am I going to mess this up and should I not try this at all and just keep funding my taxable stuff? TIA

no, just fund it. don't buy anything in the trad roth. it'll just be in money market or whatever their standard cash vehicle is. then just immediately convert it to a roth. then you can buy whatever you want. it's incredibly easy and they basically walk you through doing it. I have one there and do this every year. I have a trad roth with a zero balance I just use over and over for this.

https://investor.vanguard.com/investor-resources-education/iras/how-to-convert-traditional-ira-to-roth-ira

[Stupid Fitz]

I'm a dumbass and should have been doing this for a while, but i've got some excess cash and I'm thinking about a backdoor roth for Mrs SF. I'm doing it for her because I have an IRA that I don't want to mess with or deal with converting, transferring, taxes, etc. She doesn't currently have one so that seems easier. From what I gather, I just open a traditional IRA at Vanguard, fund it, buy whatever index fund, and then convert it. This all seems pretty easy, but as you have seen from the travel and credit card threads, I somehow make easy stuff way more difficult than it is supposed to be. Am I going to mess this up and should I not try this at all and just keep funding my taxable stuff? TIA

no, just fund it. don't buy anything in the trad roth. it'll just be in money market or whatever their standard cash vehicle is. then just immediately convert it to a roth. then you can buy whatever you want. it's incredibly easy and they basically walk you through doing it. I have one there and do this every year. I have a trad roth with a zero balance I just use over and over for this.

https://investor.vanguard.com/investor-resources-education/iras/how-to-convert-traditional-ira-to-roth-ira

 

[Tobias]

SF is going to somehow end up investing in a timeshare by the end of this one

[Stupid Fitz]

SF is going to somehow end up investing in a timeshare by the end of this one

I do love the beach when I finally get there after fighting points people.

[catastrophe]

I'm a dumbass and should have been doing this for a while, but i've got some excess cash and I'm thinking about a backdoor roth for Mrs SF. I'm doing it for her because I have an IRA that I don't want to mess with or deal with converting, transferring, taxes, etc. She doesn't currently have one so that seems easier. From what I gather, I just open a traditional IRA at Vanguard, fund it, buy whatever index fund, and then convert it. This all seems pretty easy, but as you have seen from the travel and credit card threads, I somehow make easy stuff way more difficult than it is supposed to be. Am I going to mess this up and should I not try this at all and just keep funding my taxable stuff? TIA

no, just fund it. don't buy anything in the trad roth. it'll just be in money market or whatever their standard cash vehicle is. then just immediately convert it to a roth. then you can buy whatever you want. it's incredibly easy and they basically walk you through doing it. I have one there and do this every year. I have a trad roth with a zero balance I just use over and over for this.

https://investor.vanguard.com/investor-resources-education/iras/how-to-convert-traditional-ira-to-roth-ira

 

You still can convert after buying a fund, it just might take a little longer and there’s a risk that the conversion results in a small taxable event if the value went up between buying and rolling over (which is not a problem money wise but can be a PITA come tax time depending on what you use).

Also you might want to double check but I’m pretty sure you can only convert once per year, in which case you’d want to make sure the IRA is fully funded before taking the next step.

['taterblast]

you might want to double check but I’m pretty sure you can only convert once per year, in which case you’d want to make sure the IRA is fully funded before taking the next step.

if this is accurate i broke the rules several times and haven't gotten penalized yet

[catastrophe]

you might want to double check but I’m pretty sure you can only convert once per year, in which case you’d want to make sure the IRA is fully funded before taking the next step.

if this is accurate i broke the rules several times and haven't gotten penalized yet

You’re probably right then.

I’ll bet I’m mixing that up with the Roth conversion options my work offers in our 401(k).

[Stupid Fitz]

Guys I think I did it!!!  It still took a phone call because Mrs SF and I have a joint brokerage account with only one log in and it wouldn't allow me to open up an account for her online, but they resolved that pretty quick. Plus I always expect some issue because I'm cursed. Anywho, it shows her account and I see the convert to Roth button. I'm going to wait until the cash clears and then I'll hit that button and will be a stud backdoorer.  Thanks friends.

[steve dave]

Nice work


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[Stupid Fitz]

Nice work


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Quick question as I prob messed up a tiny bit. So I got busy and then went on vacation. I fully funded the traditional IRA without opening the Roth so it sat a couple weeks. I completed everything today and converted it all to a Roth thinking I was good. When I logged in a bit later the traditional showed like $7 in interest from being in the MM fund for the week or so. The Roth is maxed, so is that $7 going to be a PITA for me at some point? I didn't think about getting interest while letting the traditional sit. TIA

[steve dave]

Nah, you’ll just pay a tiny amount of tax on it. No biggie.


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[Stupid Fitz]

Nah, you’ll just pay a tiny amount of tax on it. No biggie.


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[Tobias]

classic fitz

[Stupid Fitz]

classic fitz

Its a gift

[catastrophe]

When you’re in the tax savings game, it can be easy to forget that you only pay taxes when you actually take home some money too. You’re better off with that $7 gain than if your value stayed exactly the same.

And seriously, if you do your own taxes (with TurboTax or whatever) make sure your rollover/gain gets papered the right way in your tax return. I swear they still haven’t figured out a straightforward way to ask if you did a backdoor Roth.

[Stupid Fitz]

When you’re in the tax savings game, it can be easy to forget that you only pay taxes when you actually take home some money too. You’re better off with that $7 gain than if your value stayed exactly the same.

And seriously, if you do your own taxes (with TurboTax or whatever) make sure your rollover/gain gets papered the right way in your tax return. I swear they still haven’t figured out a straightforward way to ask if you did a backdoor Roth.

Oh man. I'm going to be right back here next tax season. I use Turbotax and I follow the "green is good" "red is bad strategy". ha

[steve dave]

When you’re in the tax savings game, it can be easy to forget that you only pay taxes when you actually take home some money too. You’re better off with that $7 gain than if your value stayed exactly the same.

And seriously, if you do your own taxes (with TurboTax or whatever) make sure your rollover/gain gets papered the right way in your tax return. I swear they still haven’t figured out a straightforward way to ask if you did a backdoor Roth.

My CPA (retired but still does my taxes because they love me like a son) has it down


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[bucket]

https://twitter.com/elerianm/status/1681706851316924442

Been reading how the stock market is overbought but my guy Mo is sounding pretty optimistic about this rally.

[catastrophe]

According to the index funds I bought in 2021, it’s still got a ways to go.

[IPA4Me]

What if the market makers priced the rate hikes on the market fall from September to December 2023? Now we're just ebbing and flowing until there's a catalyst.

Anyhow, best of luck to anyone not DCA'n monthly. Been a fun rip of late. Absolutely smashed that Netflix runup over the last few days.

[BaronessXX]

Hey there! Don't worry; we've all been there with the "easy stuff" that somehow becomes complicated. First off, kudos to you for wanting to set up a backdoor Roth for Mrs. SF, that's a smart move. Setting up a traditional IRA at Vanguard and funding it with an index fund is indeed the way to go. Then, the conversion part is pretty straightforward too. Just make sure to follow the rules, and you'll be on the right track. Since you're concerned about messing up, maybe double-check with a financial advisor or someone who has experience with this process. And by the way, have you heard about Kafe Rocks or other? The Glitnor Group made a confidential deal with them recently. Interesting stuff!

[steve dave]

Hey there! Don't worry; we've all been there with the "easy stuff" that somehow becomes complicated. First off, kudos to you for wanting to set up a backdoor Roth for Mrs. SF, that's a smart move. Setting up a traditional IRA at Vanguard and funding it with an index fund is indeed the way to go. Then, the conversion part is pretty straightforward too. Just make sure to follow the rules, and you'll be on the right track.

More like baroness XXX


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[meow meow]

that is some NSFW XXX financial advice