I have an IRA (IRA #1) of about $150,000 that was rolled over from a former employer plan. It is all pretax.
I have a second IRA (IRA #2) of about $100,000 that has a post tax basis of $50,000 (after tax contributions that I made).
I have a SEP-IRA of $12,000 (all pre tax)
I want to reverse rollover these accounts to a current employer 403b. The plan allows this.
I have filled out form 8606 over the years.
Can I do the following without any problems/flags:
1) First, reverse rollover the entire $150,000 from IRA #1
2) Second, roll over the SEP-IRA
3) After that, roll over $50,000 (the pre tax earnings) of IRA number 2?
4) After that, do a backdoor roth conversion of the remaining post tax basis (50K) from IRA #2. I will have no other IRA's that will trigger the pro rata rule.
If I do it this way I am assuming that there should be no immediate tax consequences.
Correct. With a zero year-end balance in traditional IRAs, the $50,000 Roth conversion will consist entirely of your $50,000 of basis in nondeductible traditional IRA contributions.
Does this have to be done at year end?
Does the pro-rata rule apply at the time of the Roth Conversion or only at the end of the year? If I do the reverse roll overs now, wouldn't my pre-tax amount be zero at that time, so I could do the conversion then?
The pro rata calculation to determine the nontaxable amount of the Roth conversion uses the year-end value in your traditional IRAs, not the value at any other time. You could even do the $50,000 Roth conversion first, then roll everything else to the 403(b) by year-end and the taxable result would be the same.