Question:
Is it permissible or advisable for me to open a Roth IRA and make non-deductible (my income is too high) contributions to it along with my usual Solo 401K contributions?
ANSWER:
While we can’t advise you whether to do so, please keep the following in mind:
- If your AGI is too high, you can’t make any Roth IRA contributions (see https://www.irs.gov/
retirement-plans/plan- )participant-employee/amount- of-roth-ira-contributions- that-you-can-make-for-2020 - Since you also participate in a qualified plan (ie Solo 401k), any contributions that you make to a non-Roth IRA will not be deductible (https://www.mysolo401k.net/
contribute-ira-llc-self- )directed-401k-magi-rules/ - You can’t rollover any nondeductible IRA contributions to a Solo 401k (https://www.mysolo401k.net/
nondeductible-ira- )contributions-transfer-ira- solo-401k-plan/ - Moreover, please note that you will need to work with your tax advisor regarding the rules applicable to nondeductible IRAs such as filing form 8606 and the prorata rules if you wish to rollover such nondeductible IRA funds (https://www.mysolo401k.net/
the-ira-pro-rata-rules-do-not- )affect-self-directed-solo- 401k-after-tax-back-door- contributions/
