Back Door Roth Conversion with 403(b) | Ed Slott and Company, LLC

Back Door Roth Conversion with 403(b)

Can you roll the tax deductible IRA contributions and accumulated income to a Schwab 403(b) and do a back door Roth? In short convert the nondeductible IRA contributions to a Roth? I believe the Schwab 403(b) was established when the client's contributions to a 403(b) as a teacher were rolled into her Schwab 403(b) account.

Many thanks as always!!!

Mary Dean

  • You do not rollover from a 403b to another 403b. This was either a "contract exchange" from one 403b provider to another 403b provider or this was a rollover of a 403b plan to a rollover IRA. Which was it?
    • If Schwab was an alternate provider in the 403b plan (uncommon) and the Schwab 403b accepts IRA rollovers. You can rollover all pre-tax assets and only pre-tax assets in all traditional, SEP IRA and SIMPLE IRA accounts to the Schwab 403b and then do a Roth conversion of any non-deductible basis.
    • If not and this was rolled over to a rollover IRA, it will not help.

Thank you for your prompt response.  15 to 20 years ago Schwab did have 403(b)s where you could rollover other 403(b)s.  I never saw them as school teacher contracts.  We used them on several occasions.  They discontinued allowing the rollovers roughly 15 years ago.  I believe it was due to additional liabilities imposed on 403(b) providers.  As such the client has money in a Schwab 403(b).  We will check with Schwab if they accept IRA rollovers.    

 

Find members of Ed Slott's Elite IRA Advisor GroupSM in your area.
We neither keep nor share your information entered on this form.
 

I agree to the terms and services:

You may review the terms and conditions here.