What are the Roth IRA rollover contribution limits?

I have a 401(k) plan with my employer. I have two separate, but related queries:

I am over 50 years old and plan on using the 401(k) catch up provision ($24K) for 2017. When I retire, what is the contribution limit for a rollover to existing Roth IRAs? Can I rollover (backdoor) my 401(k) (spouse is retired) into both Roth IRAs (mine and spouse), even though our joint AGI (line 15 of 1040) will exceed the IRS annual limit for IRAs? I have had the two Roth IRAs for more than 15 years.

I contributed funds (both IRAs) to the max Roth IRAs limit ($6,000 each) for 2017. I recently received a promotion. Can I withdraw the Roth IRA contributions now without IRS penalty? My 2017 AGI will now exceed the IRS annual limit for IRAs.

Financial Planning, IRAs, Peri-Retirement
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February 2017
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Good planning on your part, now let's break this down.

1) There is no limit on Roth conversions or rollovers from a Roth 401(k) to a Roth IRA, so you are all set there.

2) A backdoor Roth refers to a non-deductible traditional IRA contribution with an immediate conversion to Roth. The important thing to note is this looks at all IRA assets at an individual level, meaning that if you have some money in one IRA(pretax), then have another IRA (Or Sep, or Simple). The basis will be looked at in its entirety and you will be taxed on a pro rata basis. This however, does not take into consideration funds held in 403(b) or 401(k) accounts. If you have a pretax IRA, it is best to roll it into your 401(k), then you would not have the basis taken into consideration. Take a look at this excellent guide from Michael Kitces https://www.kitces.com/blog/the-impact-of-the-ira-aggregation-rule-on-after-tax-distributions-roth-conversions-60-day-rollovers-rmds-and-72t-payments/ 

3) The IRS limits affects the deductibility of IRA contributions, not the ability to make them. Based on your question about the back door Roth, this is likely an option, but would be affected by outside IRA assets owned by your wife (as you could put your own in your current 401(k)). You can effectively cancel the Roth contribution you made, contribute to a traditional IRA (non-deductible), then convert to a Roth.

This situation and many others like it are quite complex and usually take coordination of both a financial planner and accountant so that things won't slip through the cracks. Please reach out if you need more personalized assistance, and good luck!


Please note that the information above is not a recommendation and is for informational purposes only.

February 2017
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February 2017