Roth 2021 January Roth Contribution: $6000
June 2021 Opened first tIRA with $0 balance
July 1, 2021 Categorized $6000 due to income limits and had gains of $840, total tIRA contibution $6820
July 20, 2021 $6000 Roth Conversion from tIRA, total tIRA $840 (tIRA growht of $20)
I will be making more than the allowable contribution limits for the Roth IRA. A great problem to have. However, I already deposited and made gains on my 2021 contribution. When all said is done I had to recategorize $6000 initial investment from January and calculate and recategorize $820 of Net Attributable Income, into a tIRA. I opened my first tIRA in June, with $0 balance. I did a conversion of the $6000 back into the Roth IRA as part of the backdoor Roth. However, I do not know what to do with the $840 extra dollars, it had gained $20 since I have done this process.
- What are my options with this $840 of income sitting in a traditional IRA?
When I moved the $6000 from Roth to tIRA via Characterization and the $6000 tIRA to Roth via conversion, did I miss a step in-between, or did I understand that correctly?
Can I also convert the $840 from tIRA as a Roth so I can maximize on the Roth's tax efficiency and zero out the account to move forward with future backdoor Roth conversions?
How will this all look tax wise?
What happens if I gain $100 while figuring out what to do so the tIRA is now $940, how will that complicate my taxes? Should I wait for the investments to go back down to $820.