[Less than $1 left in tIRA after backdoor Roth Conversion]

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justsomeguy2018
Posts: 308
Joined: Wed Oct 03, 2018 8:11 pm

[Less than $1 left in tIRA after backdoor Roth Conversion]

Post by justsomeguy2018 » Wed Nov 06, 2019 6:58 pm

Hopefully my question is simple - I converted my $6,000 contribution to Roth money and then afterwards 0.93 cents was deposited as interest for the "waiting' period. So currently .93 cents is sitting in there.

I read the Whitecoat Investor blog on this, but was confused about 1 thing:

(1) Do I need to do a "2nd conversion" this year of the .93 cents to zero out the tIRA for this year? (and pay taxes on the $1)
(2) Do I leave the .93 cents in the tIRA, and just convert it next year when I do the backdoor Roth again? (and pay the taxes on the $1 next year)

I just wasn't clear if I could leave it in this year, of if I needed to do a 2nd conversion of the .93 cents (if that's even possible?)

https://www.whitecoatinvestor.com/penni ... -roth-ira/

Thank you.

rkhusky
Posts: 7464
Joined: Thu Aug 18, 2011 8:09 pm

Re: 0.93 cents left in tIRA after backdoor Roth Conversion

Post by rkhusky » Wed Nov 06, 2019 7:15 pm

Either works. The difference might be a few cents in taxes. I would probably convert in order not to have an 0.93 account balance, but that is probably OCD.

HomeStretch
Posts: 2648
Joined: Thu Dec 27, 2018 3:06 pm

Re: 0.93 cents left in tIRA after backdoor Roth Conversion

Post by HomeStretch » Wed Nov 06, 2019 7:22 pm

You don’t have to convert it this year. But if you convert it now, the $0.93 can start growing tax-free sooner! :D

Topic Author
justsomeguy2018
Posts: 308
Joined: Wed Oct 03, 2018 8:11 pm

Re: 0.93 cents left in tIRA after backdoor Roth Conversion

Post by justsomeguy2018 » Thu Nov 07, 2019 12:43 pm

So I can convert it this year and on my tax form just put that I had $1 in taxable amount?

HomeStretch
Posts: 2648
Joined: Thu Dec 27, 2018 3:06 pm

Re: 0.93 cents left in tIRA after backdoor Roth Conversion

Post by HomeStretch » Thu Nov 07, 2019 12:50 pm

Yes. You can see this for yourself by filling out Form 8606 to work through your example. The amount reported as your conversion on Form 1099R will exceed your basis by $1 (rounded) per Form 8606 which will flow through Form 1040 as taxable income.

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