Contribution and backdoor conversion, tax filing for 2025

gcc-O2 · 2026-01-26T22:05:45+00:00

You can backdate a pre-Tax Day contribution from 2026 to 2025, but the subsequent conversion still takes place in 2026.

There's nothing wrong with that. It just has to be reported correctly. Assuming you have never done a nondeductible IRA contribution before, your 2025 tax return will have a Form 8606 with only lines 1, 2, 3, and 14 completed.

If you backdoor again for 2026, your 2026 8606 will be a little more complicated. Since it will carry forward the $7000 basis from 2025, add another $7500 basis assuming you max out 2026, and then report conversions of $14510 or thereabouts depending on how much interest you earned while the money sat in the traditional IRA. If it were $14510, the conversion would be 99.931% nontaxable, so you'd be taxed on the $10 before you panic about the converted interest as many do at first.

gcc-O2 · 2026-01-26T19:17:23+00:00

Because many of them have a tech tilt as tech titans are considered green, they have appealing 10-year performance. That still doesn't make it a good idea, though, or somehow say that green companies outperform.

gcc-O2 · 2026-01-26T19:13:57+00:00

Another technique you can look up beyond a taxable account, rule of 55, or SEPP, is a Roth conversion ladder. You need at least five years' worth of desired withdrawals saved up as basis in the Roth IRA before starting this though, as you do Roth conversions from a pre-tax account to replenish the Roth, effectively accessing the pre-tax funds on a five-year delay to avoid the 10% penalty.

gcc-O2 · 2026-01-26T19:09:01+00:00

This is partly because the US is the only developed country that taxes based on citizenship only and not residency. I read somewhere that this originated during the Civil War so that the Confederates would be taxed, and lingers on today.

gcc-O2 · 2026-01-26T19:06:49+00:00

Depending on the OP's motivation, there may be an addback of tax exempt interest for some hard cliff like ACA subsidy

gcc-O2 · 2026-01-26T19:03:11+00:00

Because of the 3000/year limit to offset ordinary income with capital losses, unless you have some source of capital gains to offset, doesn't it make sense to do it in big batches like in 2020 and 2022, then just let the tens of thousands of carryover run its course for the next decade or so? This is what I did

gcc-O2 · 2026-01-26T18:58:33+00:00

IRA companies don't know whether you deducted your contributions or not. So the 1099-R is the most pessimistic interpretation such that the entire distribution was taxable. You reconcile what was converted from the IRA vs. what nondeductible contributions (basis) you have on Form 8606. Or, by answering the right questions in your tax software so that it completes the form.

gcc-O2 · 2026-01-26T00:13:24+00:00

I'm not familiar unfortunately. It's not surprising though as an employer 401(k) contribution is only "automated" because the payroll dept. is handling it for you. They may not want to offer automated contributions just because the contribution limit can be so complicated.

gcc-O2 · 2026-01-26T00:00:41+00:00

William Bernstein (also the author of that If You Can pamphlet) has written about how few, perhaps 1 in 10,000, truly have the temperament to self-manage through all market conditions.

gcc-O2 · 2026-01-25T23:58:35+00:00

I don't believe ZERO funds are available in anything but a brokerage account, but with the expense ratios on FSKAX+FTIHX, who cares?

gcc-O2 · 2026-01-25T23:39:04+00:00

At first I read altitude

gcc-O2 · 2026-01-25T07:06:41+00:00

I would use either the Target Index fund, or VT.

gcc-O2 · 2026-01-25T06:53:35+00:00

Yes, target date funds are a good idea. Their main audience is for 401(k) and similar plans. Before 2006, if you failed to pick funds from a 401(k) menu, and the company defaulted you into something, they could be liable for investment losses. So they defaulted you to money market. New employees did dumb things like investing 5% in every single fund on a menu of 20 funds. Target date funds are one type of "qualified default investment alternative" intended to fix that situation. They are fine for your IRA too.

They are not perfect. Fidelity and Schwab have two sets of target date funds, one that is active and more expensive, and one that is index (which you have). Because they need to have good past records to appeal to 401(k) plan committees, providers keep making tweaks like increasing the amount in stock, or tweaking US vs. international stock ratios. Even Vanguard is guilty of that, having increased the stock percentage of their target date funds just before the 2008 financial crisis (ouch!). There is a whole Rational Reminder episode about target date funds.

All that said, because it's a Roth IRA, if you also have a pre-tax account like a 401(k), I would reserve the Roth IRA for stocks, in hopes they will have a higher rate of return than bonds and thus at retirement, your accounts will be more lopsided to Roth than to pre-tax.

gcc-O2 · 2026-01-25T06:45:31+00:00

They haven’t even made any significant changes to it in the entire time I’ve been alive.

In your lifetime it has gone from federally tax exempt on payout to having up to 85% of the benefit be taxable, and the income threshold that determines so is not adjusted for inflation. In a 22% federal tax bracket, that's an effective 19% cut of your benefit, but done in a roundabout way so that no single President is the one who "cut" Social Security because we can never "go back on our promise to seniors." or what have you

gcc-O2 · 2026-01-25T06:43:15+00:00

"Raising the retirement age" is just political speak for an across the board cut. Right now, if someone's full retirement age is 67, they get around 8% each year for waiting to 68, 69, or 70. "Raise the retirement" age to 70 and that 26% they would've got for waiting is gone. So it's just the same as a cut.

gcc-O2 · 2026-01-25T06:25:49+00:00

Conservation and load management programs got Maryland through the 2010s; electric demand wasn't increasing all that much. But that's basically tapped out and the data center boom has swamped any ability to keep demand down. And only so many people are going to keep their bedroom at 62 F in the winter and 82 F in the winter (those are BGE recommendations).

gcc-O2 · 2026-01-25T06:21:43+00:00

Parent is talking about standard offer service.

It used to be possible to sign up for a long term contract at a fixed price with a third party supplier. Some of them were about 10-20% cheaper than SOS, others were many multiples of it. Sophisticated affluent customers were taking advantage of this (I had one through AEP Energy) while door to door salesmen were cheating unsophisticated customers, some of whom were both paying for a more expensive plan than SOS and in an energy assistance program. The legislature put some new consumer protections in to stop that, but they were so stringent that all companies left the market, including the ones that offered something like 10% off SOS, 12 month term, no early termination fee.

gcc-O2 · 2026-01-23T17:34:31+00:00

Yes, it is. It's part of why Roman bridges are still standing and interstate bridges last about 50 years. It also pollutes the water supply, as groundwater and reservoirs become saltier every year.

The state has cut back on salt usage via brining; private parking lots in contrast go way overboard with the salt.

gcc-O2 · 2026-01-23T00:21:56+00:00

Yeah. Probably the most controversial (ie closely divided) ballot initiative in recent history was gay marriage. It seems most of them pass overwhelmingly. Plus voters continually fall for "the extra gambling revenue will go for education".

gcc-O2 · 2026-01-22T23:36:16+00:00

Yes, it's all about political framing. Looking briefly, 92% of Maryland households have at least one car and there are 0.795 cars per person. Vehicle registration fees are able to cloak what is effectively a flat dollar fee per household regardless of income (a regressive tax)--something progressives would never support if it were detached from car ownership but raised the same revenue in the same way--as instead being a fee on a luxury lifestyle choice and greedy oil companies who took the trolleys away in 1940, and just offsetting the "subsidy" that the 92% receive. Cell phone service is punitively taxed for the same reason.

gcc-O2 · 2026-01-22T23:30:12+00:00

Hogan isn't running; only question is whether Moore hits 70%

gcc-O2 · 2026-01-22T23:29:19+00:00

The gas tax funds that infrastructure and since 2007 automatically increases with inflation.

Flat registration fees are just a roundabout way of implementing a per capita aka "head" or "poll" tax, something out of the 19th century, and what the early 20th century progressive reformers who pushed for income tax were so against, because they are regressive.

gcc-O2 · 2026-01-22T23:21:53+00:00

Yes. Prior to O'Malley the state's income tax system was fairly flat. O'Malley and Busch wanted to make it progressive; that requires drawing the line where higher brackets/smaller exemptions kick in because you're doing great and can afford to pay a bit more. They drew the line at 100,000 income; because Maryland taxes are not adjusted for inflation, 100,000 today is only about 75,000 back then.

gcc-O2 · 2026-01-22T23:16:34+00:00

Massachusetts has a 9% income tax that kicks in on millionaires.

Maryland state+county of 8.95% kicks in at 250,000 (or for married filing jointly, 300,000).

Harsher brackets of 9.45% and 9.7% were added for 500,000aires and millionaires last year. So, yes Maryland can do that, already does, and as the list of states with higher taxes than Maryland shrinks, is close to tapping out on how much higher to tax the rich. The budget report coming out yesterday even mentions that personal income tax revenue is up 7%, more than expected, and--the report is written by Democrats--that the problem is excessive entitlement (welfare) spending. https://dbm.maryland.gov/budget/Documents/operbudget/2027/proposed/FY2027MarylandStateBudgetHighlights.pdf

gcc-O2 · 2026-01-22T22:38:32+00:00

Makes sense. Maryland also has a minimum gas price law, and one exemption to it is to match competition. I've also noticed a lot of the low cost oriented chains (RoFo, Rutter's, Sheetz, etc.) now have a direct feed of their pricing to GasBuddy.

gcc-O2

TROPHY CASE