Few dollars remainder in TIRA due to backdoor roth

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Abk911
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Few dollars remainder in TIRA due to backdoor roth

Post by Abk911 » Sun Jan 12, 2020 11:25 am

Dear All,

I realized that my tira has 4 dollars in it. Somehow 2 from last year (edit: it was actually 2018) and 2 from this year (edit its actually from 2019) are left back while doing back door right. These are may be due to some gains while the roll over was happening. Should I leave them there or move to Roth IRA. Roth IRA is already maxed with 6k roll over this year and 5.5k last year.
Does it matter if this amount of 4 dollars stays in trad ira or it has to be made zero. Also does it become an issue if I roll that over above the 6k to Roth IRA.

Long story short I am worried that the base of ira not being zero with 1.8 dollars remaining from last year and 2 more gained this year will nullify my backdoor Roth?
Last edited by Abk911 on Sun Jan 12, 2020 3:36 pm, edited 1 time in total.

GuySmiley
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Re: Few dollars remainder in TIRA due to backdoor roth

Post by GuySmiley » Sun Jan 12, 2020 11:30 am

Ask your broker to convert the residual balance left over from the past conversions. I would not use the word "rollover". When I've converted residual balances in the past (which I must do every year in my wife's account), I have not been asked to fill out any additional forms.

BTW, the max refers to contributions. There is no max on conversions.

Uniballer
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Re: Few dollars remainder in TIRA due to backdoor roth

Post by Uniballer » Sun Jan 12, 2020 11:32 am

You can convert that money to your Roth and pay tax on it. Only the actual contribution to the TIRA is limited; you can convert your contributions plus growth at any time. If there is a conversion minimum then just make sure you convert it next year. The tiny amount left in the TIRA will not have much of a pro-rata effect on your conversion if you leave it until next year.

Topic Author
Abk911
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Re: Few dollars remainder in TIRA due to backdoor roth

Post by Abk911 » Sun Jan 12, 2020 11:33 am

GuySmiley wrote:
Sun Jan 12, 2020 11:30 am
Ask your broker to convert the residual balance left over from the past conversions. I would not use the word "rollover". When I've converted residual balances in the past (which I must do every year in my wife's account), I have not been asked to fill out any additional forms.

BTW, the max refers to contributions. There is no max on conversions.
I don't have a broker. I do if myself in vanguard. But am confused with your reply. If that 4 dollars remains there that is the concern on challenge I face. Also, if I want to make it zero, do I do similar roll over like I did for the 6k or need to do something else. The tira and rira are both in vanguard.

HomeStretch
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Re: Few dollars remainder in TIRA due to backdoor roth

Post by HomeStretch » Sun Jan 12, 2020 11:35 am

You can either convert the $4 to your Roth IRA or leave it in the tIRA. Consider converting it now, paying (an insignificant amount of) taxes on the converted pretax earnings and having no tIRA basis to track.

In your online Vanguard tIRA account, you select “convert to Roth IRA” tab to the right and go through the process, just like you did with the conversion of the original contribution.
Last edited by HomeStretch on Sun Jan 12, 2020 11:38 am, edited 2 times in total.

Topic Author
Abk911
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Re: Few dollars remainder in TIRA due to backdoor roth

Post by Abk911 » Sun Jan 12, 2020 11:36 am

Uniballer wrote:
Sun Jan 12, 2020 11:32 am
You can convert that money to your Roth and pay tax on it. Only the actual contribution to the TIRA is limited; you can convert your contributions plus growth at any time. If there is a conversion minimum then just make sure you convert it next year. The tiny amount left in the TIRA will not have much of a pro-rata effect on your conversion if you leave it until next year.
Below scenarios:

1) So If I move that 4 dollars today. Would that be ok? Although I moved my 6k last November. will the tax documents be ready for that before I file (basically for this 4 dollars)

2) Also if I simply leave them in tIra and do if next year like 6k plus these 4 dollars and any gains on that 4... That's also ok right?

Topic Author
Abk911
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Re: Few dollars remainder in TIRA due to backdoor roth

Post by Abk911 » Sun Jan 12, 2020 11:38 am

HomeStretch wrote:
Sun Jan 12, 2020 11:35 am
You can either convert the $4 to your Roth IRA or leave it in the tIRA. Consider converting it, paying (an insignificant amount of) taxes on the converted pretax earnings and having no tIRA basis to track.
So while converting / rollover of there additional 4 dollars I just ask them to withhold tax? Or just do it exactly like the previous roll over and pay tax while filing.

livesoft
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Re: Few dollars remainder in TIRA due to backdoor roth

Post by livesoft » Sun Jan 12, 2020 11:44 am

I have written this many times: Convert. Convert. Convert. Submit the conversion order right now in the next 10 minutes.

One can do as many conversions as one wants to and one will still only get a single 1099-R for that account.

This is such FREQUENTLY ASKED QUESTION that the wiki article on backdoor Roth needs to be updated with two things:

1. Expect a little bit of dividends or interest to be left behind.
2. Go ahead and convert it right away.
3. Check if any more is left behind and convert it. Repeat until done.
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GuySmiley
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Re: Few dollars remainder in TIRA due to backdoor roth

Post by GuySmiley » Sun Jan 12, 2020 11:48 am

Abk911 wrote:
Sun Jan 12, 2020 11:36 am
Uniballer wrote:
Sun Jan 12, 2020 11:32 am
You can convert that money to your Roth and pay tax on it. Only the actual contribution to the TIRA is limited; you can convert your contributions plus growth at any time. If there is a conversion minimum then just make sure you convert it next year. The tiny amount left in the TIRA will not have much of a pro-rata effect on your conversion if you leave it until next year.
Below scenarios:

1) So If I move that 4 dollars today. Would that be ok? Although I moved my 6k last November. will the tax documents be ready for that before I file (basically for this 4 dollars)

2) Also if I simply leave them in tIra and do if next year like 6k plus these 4 dollars and any gains on that 4... That's also ok right?
Moving the 4 dollars today would get reflected on your 2020 return next year, not your 2019 return this year.

Topic Author
Abk911
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Re: Few dollars remainder in TIRA due to backdoor roth

Post by Abk911 » Sun Jan 12, 2020 11:54 am

livesoft wrote:
Sun Jan 12, 2020 11:44 am
I have written this many times: Convert. Convert. Convert. Submit the conversion order right now in the next 10 minutes.

One can do as many conversions as one wants to and one will still only get a single 1099-R for that account.

This is such FREQUENTLY ASKED QUESTION that the wiki article on backdoor Roth needs to be updated with two things:

1. Expect a little bit of dividends or interest to be left behind.
2. Go ahead and convert it right away.
3. Check if any more is left behind and convert it. Repeat until done.
So if u do 4 dollars today, they will be now in 2020 return right? Or... Cause in that case I can simply add 4 dollar less this year and convert 6k in 2020. But you are spot on. Some amount is always left I think behind. Almost always.

livesoft
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Re: Few dollars remainder in TIRA due to backdoor roth

Post by livesoft » Sun Jan 12, 2020 11:57 am

Abk911 wrote:
Sun Jan 12, 2020 11:54 am
So if u do 4 dollars today, they will be now in 2020 return right? Or... Cause in that case I can simply add 4 dollar less this year and convert 6k in 2020. But you are spot on. Some amount is always left I think behind. Almost always.
You are not thinking clearly. One can convert as little or as much as one wants to each and every time. Under current tax law there is no limit to conversions. The limit is on contributions which are not conversions.

Don't leave anything small behind. Convert it.

To be clear: If you contribute $6000 in 2020, then you can certainly convert $6004 or $6100 or $12,123 or $5,912 if that is in your tIRA when you decide to convert.

The $6000 contribution can be made regardless of whether your current tIRA value is $0, $4, $231,912, or even $4,231,912 in value.
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HomeStretch
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Re: Few dollars remainder in TIRA due to backdoor roth

Post by HomeStretch » Sun Jan 12, 2020 12:02 pm

Abk911 wrote:
Sun Jan 12, 2020 11:38 am
HomeStretch wrote:
Sun Jan 12, 2020 11:35 am
You can either convert the $4 to your Roth IRA or leave it in the tIRA. Consider converting it, paying (an insignificant amount of) taxes on the converted pretax earnings and having no tIRA basis to track.
So while converting / rollover of there additional 4 dollars I just ask them to withhold tax? Or just do it exactly like the previous roll over and pay tax while filing.
Don’t bother with any withholding on a $4 conversion. If you convert now, the $4 of taxable earnings will be reported on your 2020 tax return.

I went through the same thing with my 1st backdoor Roth. My advice FWIW is don’t spend much more time on this. Just convert now. Start that $4 growing tax-free now! Keep the tIRA balance at $0 at each year end (12/31).

countdrak
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Re: Few dollars remainder in TIRA due to backdoor roth

Post by countdrak » Sun Jan 12, 2020 12:58 pm

livesoft wrote:
Sun Jan 12, 2020 11:57 am
Abk911 wrote:
Sun Jan 12, 2020 11:54 am
So if u do 4 dollars today, they will be now in 2020 return right? Or... Cause in that case I can simply add 4 dollar less this year and convert 6k in 2020. But you are spot on. Some amount is always left I think behind. Almost always.
You are not thinking clearly. One can convert as little or as much as one wants to each and every time. Under current tax law there is no limit to conversions. The limit is on contributions which are not conversions.

Don't leave anything small behind. Convert it.

To be clear: If you contribute $6000 in 2020, then you can certainly convert $6004 or $6100 or $12,123 or $5,912 if that is in your tIRA when you decide to convert.

The $6000 contribution can be made regardless of whether your current tIRA value is $0, $4, $231,912, or even $4,231,912 in value.
Thank you for the explainer everyone! I am in same boat but with a penny in my TIRA leftover.

Topic Author
Abk911
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Re: Few dollars remainder in TIRA due to backdoor roth

Post by Abk911 » Sun Jan 12, 2020 1:40 pm

Thank you everyone. I just converted the amount. Now am at zero on TIRA. Will do additional 6k when ready. I am assuming that’s gonna be fine. And will get taxed for the 4 dollar I assume.

retiredjg
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Re: Few dollars remainder in TIRA due to backdoor roth

Post by retiredjg » Sun Jan 12, 2020 2:20 pm

Abk911 wrote:
Sun Jan 12, 2020 11:25 am
Long story short I am worried that the base of ira not being zero with 1.8 dollars remaining from last year and 2 more gained this year will nullify my backdoor Roth?
Nothing is nullified.

If you converted the $5,500 to Roth in 2019, you will have to pro-rate the 2019 conversion step with the $1.80 in the tIRA at the end of the year. This will probably not change your taxes at all or maybe it will change it by a few cents, but you must make sure you do it by being sure you report the $1.80 on line 6 of Form 8606.

Go ahead and convert the $4 to Roth. Do not withhold anything for tax. In November, make sure your tIRA balance is actually $0. If not, convert whatever is in there at that time and check again before the end of the year.

retiredjg
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Re: Few dollars remainder in TIRA due to backdoor roth

Post by retiredjg » Sun Jan 12, 2020 2:21 pm

Abk911 wrote:
Sun Jan 12, 2020 1:40 pm
Thank you everyone. I just converted the amount. Now am at zero on TIRA. Will do additional 6k when ready. I am assuming that’s gonna be fine. And will get taxed for the 4 dollar I assume.
What additional $6k? Your first post says you already did a 2020 contribution.

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Abk911
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Re: Few dollars remainder in TIRA due to backdoor roth

Post by Abk911 » Sun Jan 12, 2020 3:02 pm

retiredjg wrote:
Sun Jan 12, 2020 2:21 pm
Abk911 wrote:
Sun Jan 12, 2020 1:40 pm
Thank you everyone. I just converted the amount. Now am at zero on TIRA. Will do additional 6k when ready. I am assuming that’s gonna be fine. And will get taxed for the 4 dollar I assume.
What additional $6k? Your first post says you already did a 2020 contribution.
Am sorry, I meant I did the 2019. This 4 dollars are left from 2019.

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Abk911
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Re: Few dollars remainder in TIRA due to backdoor roth

Post by Abk911 » Sun Jan 12, 2020 3:04 pm

Correction: 2 dollars from 2018 are left and 2 from 2019.
I now moved 4 dollars to 2020 conversion.
Do I do 5996 in 2020? Or full 6k considering the 4 dollars from previous years are now moved from tira to Rira backdoor.

retiredjg
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Re: Few dollars remainder in TIRA due to backdoor roth

Post by retiredjg » Sun Jan 12, 2020 3:51 pm

Abk911 wrote:
Sun Jan 12, 2020 3:04 pm
Correction: 2 dollars from 2018 are left and 2 from 2019.
This means you should have pro-rated the 2018 conversion (if you did one 2018) and also pro-rated the 2019 conversion. Did you?

Do I do 5996 in 2020? Or full 6k considering the 4 dollars from previous years are now moved from tira to Rira backdoor.
The $6k is the limit for your contribution. You get to put the full $6k in there. But you said you already made a $6k contribution and conversion for 2020.

I'm beginning to think you are are confused about what years you have contributed for and in which years you are supposed to report the conversion. Sometimes they are not the same. Or maybe I'm just mis-interpreting what you are saying.

If you want help with that, you need to list the dates of each contribution and the date each contribution was converted to Roth IRA.

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Abk911
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Re: Few dollars remainder in TIRA due to backdoor roth

Post by Abk911 » Sun Jan 12, 2020 4:03 pm

retiredjg wrote:
Sun Jan 12, 2020 3:51 pm
Abk911 wrote:
Sun Jan 12, 2020 3:04 pm
Correction: 2 dollars from 2018 are left and 2 from 2019.
This means you should have pro-rated the 2018 conversion (if you did one 2018) and also pro-rated the 2019 conversion. Did you?

Do I do 5996 in 2020? Or full 6k considering the 4 dollars from previous years are now moved from tira to Rira backdoor.
The $6k is the limit for your contribution. You get to put the full $6k in there. But you said you already made a $6k contribution and conversion for 2020.

I'm beginning to think you are are confused about what years you have contributed for and in which years you are supposed to report the conversion. Sometimes they are not the same. Or maybe I'm just mis-interpreting what you are saying.

If you want help with that, you need to list the dates of each contribution and the date each contribution was converted to Roth IRA.
I think I am confused but here is the situation:
1) I did 2018 contribution in 2019 and conversion too. but 1.5 dollars was left over in tira to date. As for conversion it was tagged to 2018 as it was done earlier in the year.
2) I did 2019 contribution in 2019 and conversion as well. but 2.5 or so dollar was left over.
3) the 4 dollar combined leftover I converted today. I think it went as 2020.
4) I am yet to do 2020 contribution to tira and conversion to backdoor roth.

I did not pro rate anything. What should I do now :(
Pls do advise. I am worried that I messed up.

retiredjg
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Re: Few dollars remainder in TIRA due to backdoor roth

Post by retiredjg » Sun Jan 12, 2020 4:32 pm

Abk911 wrote:
Sun Jan 12, 2020 4:03 pm
I think I am confused but here is the situation:
Yes, I think you are. :happy

1) I did 2018 contribution in 2019 and conversion too. but 1.5 dollars was left over in tira to date. As for conversion it was tagged to 2018 as it was done earlier in the year.
The 2018 contribution should have been recorded on the 2018 Form 8606 on your taxes. Did you do that? If not, don't worry...that can be fixed.

A conversion is not "tagged" to a previous year. Never. Ever.

A contribution can "be tagged" for an earlier year though. That is what you are thinking of.


The conversion occurred in 2019 so it should be recorded on the 2019 Form 8606 on your taxes which you have not done yet. You will need to pro-rate that conversion with whatever was in the tIRA on 12/31/2019. I first thought that was $1.80 but now think it was more. You need to check your tIRA records and be sure. Exactly how much was in there on 12/31/2019?

2) I did 2019 contribution in 2019 and conversion as well. but 2.5 or so dollar was left over.
The 2019 contribution will be recorded on the 2019 Form 8606. The conversion will also be recorded on the 2019 Form 8606. You have not done these yet. The money left over was another $2.50? Exactly how much was in any tIRA you own on 12/31/2019? Look it up.

3) the 4 dollar combined leftover I converted today. I think it went as 2020.
Anything converted in 2020, no matter when it was contributed, is reported as a 2020 conversion.

4) I am yet to do 2020 contribution to tira and conversion to backdoor roth.
Ok. May I suggest that you not do anything until we get this straight? :happy

I did not pro rate anything. What should I do now :(
You are off the hook for pro-rating the 2018 return because you did not do a Roth conversion in 2018.

You will need to do it for your 2019 return but you are not yet late on that.

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Wiggums
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Re: Few dollars remainder in TIRA due to backdoor roth

Post by Wiggums » Sun Jan 12, 2020 4:36 pm

livesoft wrote:
Sun Jan 12, 2020 11:44 am
I have written this many times: Convert. Convert. Convert. Submit the conversion order right now in the next 10 minutes.

One can do as many conversions as one wants to and one will still only get a single 1099-R for that account.

This is such FREQUENTLY ASKED QUESTION that the wiki article on backdoor Roth needs to be updated with two things:

1. Expect a little bit of dividends or interest to be left behind.
2. Go ahead and convert it right away.
3. Check if any more is left behind and convert it. Repeat until done.
+1

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Wiggums
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Re: Few dollars remainder in TIRA due to backdoor roth

Post by Wiggums » Sun Jan 12, 2020 4:39 pm

Abk911 wrote:
Sun Jan 12, 2020 11:33 am
GuySmiley wrote:
Sun Jan 12, 2020 11:30 am
Ask your broker to convert the residual balance left over from the past conversions. I would not use the word "rollover". When I've converted residual balances in the past (which I must do every year in my wife's account), I have not been asked to fill out any additional forms.

BTW, the max refers to contributions. There is no max on conversions.
I don't have a broker. I do if myself in vanguard. But am confused with your reply. If that 4 dollars remains there that is the concern on challenge I face. Also, if I want to make it zero, do I do similar roll over like I did for the 6k or need to do something else. The tira and rira are both in vanguard.
Brokerage company where you have the account in question.

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Abk911
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Re: Few dollars remainder in TIRA due to backdoor roth

Post by Abk911 » Sun Jan 12, 2020 4:39 pm

retiredjg wrote:
Sun Jan 12, 2020 4:32 pm
Abk911 wrote:
Sun Jan 12, 2020 4:03 pm
I think I am confused but here is the situation:
Yes, I think you are. :happy

1) I did 2018 contribution in 2019 and conversion too. but 1.5 dollars was left over in tira to date. As for conversion it was tagged to 2018 as it was done earlier in the year.
The 2018 contribution should have been recorded on the 2018 Form 8606 on your taxes. Did you do that? If not, don't worry...that can be fixed.

A conversion is not "tagged" to a previous year. Never. Ever.

A contribution can "be tagged" for an earlier year though. That is what you are thinking of.


The conversion occurred in 2019 so it should be recorded on the 2019 Form 8606 on your taxes which you have not done yet. You will need to pro-rate that conversion with whatever was in the tIRA on 12/31/2019. I first thought that was $1.80 but now think it was more. You need to check your tIRA records and be sure. Exactly how much was in there on 12/31/2019?

2) I did 2019 contribution in 2019 and conversion as well. but 2.5 or so dollar was left over.
The 2019 contribution will be recorded on the 2019 Form 8606. The conversion will also be recorded on the 2019 Form 8606. You have not done these yet. The money left over was another $2.50? Exactly how much was in any tIRA you own on 12/31/2019? Look it up.

3) the 4 dollar combined leftover I converted today. I think it went as 2020.
Anything converted in 2020, no matter when it was contributed, is reported as a 2020 conversion.

4) I am yet to do 2020 contribution to tira and conversion to backdoor roth.
Ok. May I suggest that you not do anything until we get this straight? :happy

I did not pro rate anything. What should I do now :(
You are off the hook for pro-rating the 2018 return because you did not do a Roth conversion in 2018.

You will need to do it for your 2019 return but you are not yet late on that.
1) my 2018 contribution and conversion is already reported and taken care of in 2018 tax filing.
2) 1.5 dollars was left in account in trai
3) 2019 contribution and conversion was done in 2019. Will take care of that in tax filing now.
4) this added 2.5 dollars left over to the 1.5 / no idea why even when I clicked convert entire account.
5) today i converted that 4 dollars and went as 2020.

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Re: Few dollars remainder in TIRA due to backdoor roth

Post by retiredjg » Sun Jan 12, 2020 4:55 pm

Read what I said more carefully and try those answers again. :happy

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Abk911
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Re: Few dollars remainder in TIRA due to backdoor roth

Post by Abk911 » Sun Jan 12, 2020 5:09 pm

retiredjg wrote:
Sun Jan 12, 2020 4:55 pm
Read what I said more carefully and try those answers again. :happy
Checked sweep in and out dates.

1) 2018 sweep in of 5500 (after tax) to TIRA was in august and sweep out to RIRA was also in August. I think this was taken care of in tax filing for 2018 when I filed taxes in feb 2019. However this left some 1.5 dollars in TIRA.
2) I did 2019 sweep in to TIRA for 6000 on Nov 2019. Sweep out to RIRA also in nov 2019. This somehow left another 2.5 dollars in TIRA.
3) After the posts today I did 4 dollars sweep out to RIRA from TIRA.

livesoft
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Re: Few dollars remainder in TIRA due to backdoor roth

Post by livesoft » Sun Jan 12, 2020 5:41 pm

Abk911 wrote:
Sun Jan 12, 2020 5:09 pm
3) After the posts today I did 4 dollars sweep out to RIRA from TIRA.
Let me ask you a question:

What is the difference between a contribution, a conversion, and a rollover?

I suspect what a "sweep" is, but the IRS does not use that term ... or at least I don't think they use that term.
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Abk911
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Re: Few dollars remainder in TIRA due to backdoor roth

Post by Abk911 » Sun Jan 12, 2020 5:49 pm

livesoft wrote:
Sun Jan 12, 2020 5:41 pm
Abk911 wrote:
Sun Jan 12, 2020 5:09 pm
3) After the posts today I did 4 dollars sweep out to RIRA from TIRA.
Let me ask you a question:

What is the difference between a contribution, a conversion, and a rollover?

I suspect what a "sweep" is, but the IRS does not use that term ... or at least I don't think they use that term.
I just mentioned what my vanguard history mentioned.
The sweep in to Ira is the contribution and sweep out to RIRA is the conversion.

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Re: Few dollars remainder in TIRA due to backdoor roth

Post by livesoft » Sun Jan 12, 2020 6:05 pm

I don't think the $4 was a contribution. It was probably earnings or gains or something, but unless you put it in with a check from your checking account or an ACH transfer from your checking account or your taxable brokerage account, then I don't think it is a contribution.
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Abk911
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Re: Few dollars remainder in TIRA due to backdoor roth

Post by Abk911 » Sun Jan 12, 2020 6:42 pm

livesoft wrote:
Sun Jan 12, 2020 6:05 pm
I don't think the $4 was a contribution. It was probably earnings or gains or something, but unless you put it in with a check from your checking account or an ACH transfer from your checking account or your taxable brokerage account, then I don't think it is a contribution.
The dollar 4 is just probably the gains while it was in IRA.

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Abk911
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Re: Few dollars remainder in TIRA due to backdoor roth

Post by Abk911 » Sun Jan 12, 2020 8:33 pm

Abk911 wrote:
Sun Jan 12, 2020 5:09 pm
retiredjg wrote:
Sun Jan 12, 2020 4:55 pm
Read what I said more carefully and try those answers again. :happy
Checked sweep in and out dates.

1) 2018 sweep in of 5500 (after tax) to TIRA was in august and sweep out to RIRA was also in August. I think this was taken care of in tax filing for 2018 when I filed taxes in feb 2019. However this left some 1.5 dollars in TIRA.
2) I did 2019 sweep in to TIRA for 6000 on Nov 2019. Sweep out to RIRA also in nov 2019. This somehow left another 2.5 dollars in TIRA.
3) After the posts today I did 4 dollars sweep out to RIRA from TIRA.
Any suggestions based on above?
Sweep in tira is a contribution and sweep into the Rira is conversion.

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Re: Few dollars remainder in TIRA due to backdoor roth

Post by LadyGeek » Sun Jan 12, 2020 8:56 pm

This thread is now in the Personal Finance (Not Investing) forum (tax questions).

outbackcountry has a question which I've moved into a new thread. See: [Backdoor Roth: Am I doing this correctly?]
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Re: Few dollars remainder in TIRA due to backdoor roth

Post by retiredjg » Mon Jan 13, 2020 8:05 am

Abk911 wrote:
Sun Jan 12, 2020 5:09 pm
1) 2018 sweep in of 5500 (after tax) to TIRA was in august and sweep out to RIRA was also in August. I think this was taken care of in tax filing for 2018 when I filed taxes in feb 2019. However this left some 1.5 dollars in TIRA.
Above, you said the 2018 contribution and the conversion of that money were done in 2019. Now you are saying you did it in 2018. Which is right?

It does not matter how much money was left behind. What was in the tIRA on the last day of 2018? Look it up and tell us the exact number.

"I think it was taken care of" does not tell us if you did Form 8606 or if you did it correctly. Find your 2018 taxes. Find the form and tell us what is on the form. Please. :happy

2) I did 2019 sweep in to TIRA for 6000 on Nov 2019. Sweep out to RIRA also in nov 2019. This somehow left another 2.5 dollars in TIRA.
Not interested in how much money was left behind. What was in the tIRA on the last day of 2019? Look it up and tell us the exact number.

Sorry to be such a nag, but all of this information is needed to help you fix this. If you are unwilling to fix this, you should not be using the back door any more. It will only cause you trouble. :(

anticrastinator
Posts: 27
Joined: Mon Apr 13, 2015 4:37 am

Re: Few dollars remainder in TIRA due to backdoor roth

Post by anticrastinator » Mon Jan 13, 2020 10:06 am

I too am in the confused camp. What is the downside of leaving a few dollars behind in the tIRA over years? On the first year I did my backdoor conversion, I converted them all, only to find out later that TD Ameritrade closed my tIRA account since it had no funds left in it. For the next year I had to open a new tIRA then transfer all but a few dollars to my Roth. I did it intentionally so TDA would not close the account again, and I was able to use the same account for the subsequent years of tIRA contributions and Roth conversions. Was that wrong?

Topic Author
Abk911
Posts: 100
Joined: Thu Aug 09, 2018 1:22 pm

Re: Few dollars remainder in TIRA due to backdoor roth

Post by Abk911 » Mon Jan 13, 2020 10:29 am

retiredjg wrote:
Mon Jan 13, 2020 8:05 am
Abk911 wrote:
Sun Jan 12, 2020 5:09 pm
1) 2018 sweep in of 5500 (after tax) to TIRA was in august and sweep out to RIRA was also in August. I think this was taken care of in tax filing for 2018 when I filed taxes in feb 2019. However this left some 1.5 dollars in TIRA.
Above, you said the 2018 contribution and the conversion of that money were done in 2019. Now you are saying you did it in 2018. Which is right?

It does not matter how much money was left behind. What was in the tIRA on the last day of 2018? Look it up and tell us the exact number.

"I think it was taken care of" does not tell us if you did Form 8606 or if you did it correctly. Find your 2018 taxes. Find the form and tell us what is on the form. Please. :happy

2) I did 2019 sweep in to TIRA for 6000 on Nov 2019. Sweep out to RIRA also in nov 2019. This somehow left another 2.5 dollars in TIRA.
Not interested in how much money was left behind. What was in the tIRA on the last day of 2019? Look it up and tell us the exact number.

Sorry to be such a nag, but all of this information is needed to help you fix this. If you are unwilling to fix this, you should not be using the back door any more. It will only cause you trouble. :(
u are not a nag. u are helping me and i admire you for that. and am very thankful. i logged in and checked all documents again. part of it is me struggling on vanguard site. Now i went to Activities > balances by date (which is in balances and holdings and selected date of 12/31. does not allow me to do 01/01 as date for TIRA:

1) dec 31,2018... both for me and wife it shows. 0 (no clue how as am pretty sure there was a dollar or so left after i had moved the 5500 in 2018.

2) i had completed rollover in 2018 and not 2019. somehow i mistook that. i am sorry. or so it looks :(

3) The balance for dec 31 2019 is showing 3.91 for both of us... 3.91 in each TIRA. This is the one i moved now to 2020 RIRA. so now the balance is zero.

4) we did form 8606: for both of us

below it is:

wife:
1 : 5500
3 : 5500
5 : 5500
13: 5500
16 : 5504
17 : 5500
18 : 4

me:
1 : 5500
3 : 5500
5 : 5500
13 : 5500
16 : 5504
17 : 5500
18 : 4
Last edited by Abk911 on Mon Jan 13, 2020 11:31 am, edited 2 times in total.

livesoft
Posts: 69617
Joined: Thu Mar 01, 2007 8:00 pm

Re: Few dollars remainder in TIRA due to backdoor roth

Post by livesoft » Mon Jan 13, 2020 10:45 am

anticrastinator wrote:
Mon Jan 13, 2020 10:06 am
I too am in the confused camp. What is the downside of leaving a few dollars behind in the tIRA over years?
the downside is that the few dollars is not earning tax-free gains and you have to put something on Line 6 of your Form 8606 and do the pro-rated calculation.

I have accounts with a balance of $0.00 for years at TDAmeritrade. Only for one of them did TDAmeritrade send me a letter saying they intended to close it unless I called them up. I called them up and the account was not closed. A year or so later, I knew that I did not need the account anymore and had them close it without an account closer fee. However, I must note that I was so-called "Apex" level at the time and I think account closure fees are waived for Apex-level clients.
Wiki This signature message sponsored by sscritic: Learn to fish.

Topic Author
Abk911
Posts: 100
Joined: Thu Aug 09, 2018 1:22 pm

Re: Few dollars remainder in TIRA due to backdoor roth

Post by Abk911 » Mon Jan 13, 2020 3:25 pm

retiredjg wrote:
Mon Jan 13, 2020 8:05 am
Abk911 wrote:
Sun Jan 12, 2020 5:09 pm
1) 2018 sweep in of 5500 (after tax) to TIRA was in august and sweep out to RIRA was also in August. I think this was taken care of in tax filing for 2018 when I filed taxes in feb 2019. However this left some 1.5 dollars in TIRA.
Above, you said the 2018 contribution and the conversion of that money were done in 2019. Now you are saying you did it in 2018. Which is right?

It does not matter how much money was left behind. What was in the tIRA on the last day of 2018? Look it up and tell us the exact number.

"I think it was taken care of" does not tell us if you did Form 8606 or if you did it correctly. Find your 2018 taxes. Find the form and tell us what is on the form. Please. :happy

2) I did 2019 sweep in to TIRA for 6000 on Nov 2019. Sweep out to RIRA also in nov 2019. This somehow left another 2.5 dollars in TIRA.
Not interested in how much money was left behind. What was in the tIRA on the last day of 2019? Look it up and tell us the exact number.

Sorry to be such a nag, but all of this information is needed to help you fix this. If you are unwilling to fix this, you should not be using the back door any more. It will only cause you trouble. :(
I responded to all your questions a couple of post above. Looking forward to your guidance and suggestions.

retiredjg
Posts: 39035
Joined: Thu Jan 10, 2008 12:56 pm

Re: Few dollars remainder in TIRA due to backdoor roth

Post by retiredjg » Mon Jan 13, 2020 3:52 pm

Abk911 wrote:
Mon Jan 13, 2020 10:29 am
1) dec 31,2018... both for me and wife it shows. 0 (no clue how as am pretty sure there was a dollar or so left after i had moved the 5500 in 2018.
OK, now we are getting somewhere.

The Form 8606 indicates that you and she each converted $5,504 to Roth and that you paid taxes on that $4. It appears to me your 8606 forms are correct except that there should be a $0 on line 14. It also appears to me that your memory is faulty. :happy You need to start making good notes to yourself.

2) i had completed rollover in 2018 and not 2019. somehow i mistook that. i am sorry. or so it looks :(
Like I said, it appears your memory was faulty on this contribution. But not to worry, it appears you did both the conversion and the tax form right. That's a relief because it is something you don't have to go back and fix now.


3) The balance for dec 31 2019 is showing 3.91 for both of us... 3.91 in each TIRA. This is the one i moved now to 2020 RIRA. so now the balance is zero.
When doing your 2019 taxes in the next few months, you each will have to pro-rate the $6k conversion with that $3.91 that was left in the IRAs at the end of the year (let's just call it $4). If you do the form by hand, that $4 goes on line 6. If you use software, line 6 (and several others) may be blank but the calculations are going on the in background.

The pro-rating means that a tiny portion of your conversion (a few dollars) will be taxable and a tiny portion of basis will be left on line 14 of the 2019 Form 8606. That's OK.

How do you do your taxes?


A year from now, if you do another back door procedure in 2020, that $4 that you converted yesterday will show up on your 1099 along with your 2020 contribution. Make yourself a note to expect it.

KingRiggs
Posts: 361
Joined: Wed Dec 12, 2018 12:19 pm
Location: Indiana

Re: Few dollars remainder in TIRA due to backdoor roth

Post by KingRiggs » Mon Jan 13, 2020 3:58 pm

In the future, at least at Vanguard, you can avoid this.

When you convert the tIRA to Roth, instead of entering the current balance (or, as I'm guessing as you did, a nice round number like $6,000), there is a check box that says something like "convert entire balance". When you do this, the conversion will include the few cents/dollars that have accumulated in the tIRA. Even after the conversion takes place, there may be a few cents left in the tIRA, but if you checked that box, Vanguard will convert even that until your tIRA balance is zero. And they will leave your tIRA open with a zero balance indefinitely.
Advice = noun | Advise = verb | | Roth, not ROTH

Topic Author
Abk911
Posts: 100
Joined: Thu Aug 09, 2018 1:22 pm

Re: Few dollars remainder in TIRA due to backdoor roth

Post by Abk911 » Mon Jan 13, 2020 4:06 pm

retiredjg wrote:
Mon Jan 13, 2020 3:52 pm
Abk911 wrote:
Mon Jan 13, 2020 10:29 am
1) dec 31,2018... both for me and wife it shows. 0 (no clue how as am pretty sure there was a dollar or so left after i had moved the 5500 in 2018.
OK, now we are getting somewhere.

The Form 8606 indicates that you and she each converted $5,504 to Roth and that you paid taxes on that $4. It appears to me your 8606 forms are correct except that there should be a $0 on line 14. It also appears to me that your memory is faulty. :happy You need to start making good notes to yourself.

2) i had completed rollover in 2018 and not 2019. somehow i mistook that. i am sorry. or so it looks :(
Like I said, it appears your memory was faulty on this contribution. But not to worry, it appears you did both the conversion and the tax form right. That's a relief because it is something you don't have to go back and fix now.


3) The balance for dec 31 2019 is showing 3.91 for both of us... 3.91 in each TIRA. This is the one i moved now to 2020 RIRA. so now the balance is zero.
When doing your 2019 taxes in the next few months, you each will have to pro-rate the $6k conversion with that $3.91 that was left in the IRAs at the end of the year (let's just call it $4). If you do the form by hand, that $4 goes on line 6. If you use software, line 6 (and several others) may be blank but the calculations are going on the in background.

The pro-rating means that a tiny portion of your conversion (a few dollars) will be taxable and a tiny portion of basis will be left on line 14 of the 2019 Form 8606. That's OK.

How do you do your taxes?


A year from now, if you do another back door procedure in 2020, that $4 that you converted yesterday will show up on your 1099 along with your 2020 contribution. Make yourself a note to expect it.
Thanks for the help so far. and you are correct, my memory got a bot blank on that imp conversion date and i am very sorry. Infact you insisting to fish exact data helped a lot.

so my inderstanding is:

1) 2018 is clean and nothing needs to be done.

2) 2019 filing: since I use turbotax. where should i enter that 3.91 dollars. Do i need to put it in manually? Or turbotax will auto work on it?

3) as you say a year from now the 4 dollar will show up on 1099. Do i need to do anything to that (as in enter as income ? do something as a manual entry?) or its just something i need to be aware and turbotax will auto take care?

retiredjg
Posts: 39035
Joined: Thu Jan 10, 2008 12:56 pm

Re: Few dollars remainder in TIRA due to backdoor roth

Post by retiredjg » Mon Jan 13, 2020 4:27 pm

Abk911 wrote:
Mon Jan 13, 2020 4:06 pm
1) 2018 is clean and nothing needs to be done.
Appears to be fine to me.

2) 2019 filing: since I use turbotax. where should i enter that 3.91 dollars. Do i need to put it in manually? Or turbotax will auto work on it?
If you use the question and answer format, it should ask you. Go right now and look at the wording on line 6 - it might help you recognize the question when it comes up. If you just fill in the blanks instead of using the question format, you will enter it manually.

3) as you say a year from now the 4 dollar will show up on 1099. Do i need to do anything to that (as in enter as income ? do something as a manual entry?) or its just something i need to be aware and turbotax will auto take care?
For 2020, convert the entire account to Roth. Don't convert just the $6k. If there is no growth between the contribution and the conversion, you will convert exactly $6k. When your 1099 comes, it will say $6004 because you have already converted $4 this week.

If there is some growth between your contribution and the conversion, the 1099 will say $4 over whatever you converted (remember to convert it all). The 1099 will report a total of all conversions that happen in 2020.

Topic Author
Abk911
Posts: 100
Joined: Thu Aug 09, 2018 1:22 pm

Re: Few dollars remainder in TIRA due to backdoor roth

Post by Abk911 » Mon Jan 13, 2020 4:55 pm

retiredjg wrote:
Mon Jan 13, 2020 4:27 pm
Abk911 wrote:
Mon Jan 13, 2020 4:06 pm
1) 2018 is clean and nothing needs to be done.
Appears to be fine to me.

2) 2019 filing: since I use turbotax. where should i enter that 3.91 dollars. Do i need to put it in manually? Or turbotax will auto work on it?
If you use the question and answer format, it should ask you. Go right now and look at the wording on line 6 - it might help you recognize the question when it comes up. If you just fill in the blanks instead of using the question format, you will enter it manually.

3) as you say a year from now the 4 dollar will show up on 1099. Do i need to do anything to that (as in enter as income ? do something as a manual entry?) or its just something i need to be aware and turbotax will auto take care?
For 2020, convert the entire account to Roth. Don't convert just the $6k. If there is no growth between the contribution and the conversion, you will convert exactly $6k. When your 1099 comes, it will say $6004 because you have already converted $4 this week.

If there is some growth between your contribution and the conversion, the 1099 will say $4 over whatever you converted (remember to convert it all). The 1099 will report a total of all conversions that happen in 2020.
People like you make me realize there is good in this world. Thanks mate! you have no idea how much your help means to me.

HomeStretch
Posts: 3520
Joined: Thu Dec 27, 2018 3:06 pm

Re: Few dollars remainder in TIRA due to backdoor roth

Post by HomeStretch » Mon Jan 13, 2020 4:57 pm

anticrastinator wrote:
Mon Jan 13, 2020 10:06 am
I too am in the confused camp. What is the downside of leaving a few dollars behind in the tIRA over years? On the first year I did my backdoor conversion, I converted them all, only to find out later that TD Ameritrade closed my tIRA account since it had no funds left in it. For the next year I had to open a new tIRA then transfer all but a few dollars to my Roth. I did it intentionally so TDA would not close the account again, and I was able to use the same account for the subsequent years of tIRA contributions and Roth conversions. Was that wrong?
There is no need to leave a balance in a tIRA account for it to remain open at Vanguard or Fidelity. When converting the entire tIRA balance to Roth, Fidelity asks if the tIRA should remain open or be closed. Vanguard leaves the tIRA account open after a Roth conversion without prompting.

retiredjg
Posts: 39035
Joined: Thu Jan 10, 2008 12:56 pm

Re: Few dollars remainder in TIRA due to backdoor roth

Post by retiredjg » Mon Jan 13, 2020 5:13 pm

Abk911 wrote:
Mon Jan 13, 2020 4:55 pm
People like you make me realize there is good in this world. Thanks mate! you have no idea how much your help means to me.
Thanks for the kind words - happy to help. :happy

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