I get nervous advising on these things, as there are so many things that can come back to bite you. Would love if someone can see if I am missing anything obvious here. High income couple has husband as an employee covered by 401(k); wife is self-employed with past SEP IRA balance. This is only IRA they have. Want to start contributing to backdoor Roth in 2019, and transfer SEP balance to a 401(k) in 2020.
My thinking is that they can both contribute to a non-deductible IRA for 2019; however, the entire SEP IRA balance should be transferred to a 401(k) before 12-31-19. This way only the earnings on the non-deductible IRA will be taxed when converted to Roth. If the SEP is not transferred to 401(k) before 12-31-19, then the SEP balance will be included in the calculation for what is taxable. Is my thinking correct?