tIRA to Roth conversion question

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Topic Author
DoctorPhysics
Posts: 102
Joined: Sun Jun 07, 2015 12:50 pm

tIRA to Roth conversion question

Post by DoctorPhysics » Wed Jun 19, 2019 12:41 pm

I opened a tIRA for my wife, put $5,500 in cash, left it sit for a bit (I think 2 or 3 months), it gained about $25 dollars in interest then I opened the Roth and moved the tIRA funds over in whole. Somehow $5 dollars more of additional interest posted into the tIRA.

What, if any complexity did I introduce to our future tax filings?

Can I move the additional $5 dollars of interest from the tIRA over to the Roth now?

Note, tIRA and Roth initially had zero balance. This was my first backdoor Roth attempt.

fabdog
Posts: 613
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Location: Williamsburg VA

Re: tIRA to Roth conversion question

Post by fabdog » Wed Jun 19, 2019 1:27 pm

Did not introduce any new complexity... you would get a 1099R next January for the conversion even if there had been no gain. The ~$25 in gain you had will be taxable as ordinary income, and if you go ahead and send along the ~$5 to the Roth it will be taxed as well. No big deal, your turbotax (or other software) will handle it fine

In the future when you do these check and see if there is an option to "sweep" any trailing earnings from the tIRA to the Roth so you don't have to track it and take any other actions

Mike

Topic Author
DoctorPhysics
Posts: 102
Joined: Sun Jun 07, 2015 12:50 pm

Re: tIRA to Roth conversion question

Post by DoctorPhysics » Wed Jun 19, 2019 1:32 pm

fabdog wrote:
Wed Jun 19, 2019 1:27 pm
Did not introduce any new complexity... you would get a 1099R next January for the conversion even if there had been no gain. The ~$25 in gain you had will be taxable as ordinary income, and if you go ahead and send along the ~$5 to the Roth it will be taxed as well. No big deal, your turbotax (or other software) will handle it fine

In the future when you do these check and see if there is an option to "sweep" any trailing earnings from the tIRA to the Roth so you don't have to track it and take any other actions

Mike

Super, thanks for alleviating my concerns Mike

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FiveK
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Joined: Sun Mar 16, 2014 2:43 pm

Re: tIRA to Roth conversion question

Post by FiveK » Wed Jun 19, 2019 1:47 pm

DoctorPhysics wrote:
Wed Jun 19, 2019 12:41 pm
What, if any complexity did I introduce to our future tax filings?
Form 8606.

Try filling it out by hand now. Questions asked by tax software are often unclear, leading to erroneous entries on that form. You should know how it should look, and compare that to whatever tax software generates.

Topic Author
DoctorPhysics
Posts: 102
Joined: Sun Jun 07, 2015 12:50 pm

Re: tIRA to Roth conversion question

Post by DoctorPhysics » Wed Jun 19, 2019 3:19 pm

FiveK wrote:
Wed Jun 19, 2019 1:47 pm
DoctorPhysics wrote:
Wed Jun 19, 2019 12:41 pm
What, if any complexity did I introduce to our future tax filings?
Form 8606.

Try filling it out by hand now. Questions asked by tax software are often unclear, leading to erroneous entries on that form. You should know how it should look, and compare that to whatever tax software generates.

Excellent idea, homework for me to do :)

rkhusky
Posts: 6761
Joined: Thu Aug 18, 2011 8:09 pm

Re: tIRA to Roth conversion question

Post by rkhusky » Thu Jun 20, 2019 7:15 am

Next time try moving it over to the Roth within a day or two.

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