My son contributed $6500 to a non-deductible IRA at the end of 2023. He is finally getting around to converting it to Roth, but the IRA account has $130 in interest. He did not have a traditional IRA account prior to opening the account that he funded at the end of '23. He has workplace 401K and 401K Roth accounts.
Based on what I read in the Wiki, I believe he should convert the entire amount, but somehow declare $130 as taxable earnings? Can anyone confirm that this is correct? And if so, how does he inform Fidelity that $130 should be considered taxable?
He filed form 8606 with his '23 return, and I understand that his '24 return will be complicated by the '23 contribution and '24 conversion.
There was an excellent article that someone linked in a previous discussion which will hopefully help with tax filing https://thefinancebuff.com/backdoor-rot ... vious-year
In an attempt to avoid this two year straddle approach he is now dealing with, is it OK to contribute to a non-deductible IRA for '24 now and convert promptly? Or will this create more of a mess as he will have to report both the '23 conversion and '24 conversion on his '24 taxes?
Thanks!
Based on what I read in the Wiki, I believe he should convert the entire amount, but somehow declare $130 as taxable earnings? Can anyone confirm that this is correct? And if so, how does he inform Fidelity that $130 should be considered taxable?
He filed form 8606 with his '23 return, and I understand that his '24 return will be complicated by the '23 contribution and '24 conversion.
There was an excellent article that someone linked in a previous discussion which will hopefully help with tax filing https://thefinancebuff.com/backdoor-rot ... vious-year
In an attempt to avoid this two year straddle approach he is now dealing with, is it OK to contribute to a non-deductible IRA for '24 now and convert promptly? Or will this create more of a mess as he will have to report both the '23 conversion and '24 conversion on his '24 taxes?
Thanks!
Statistics: Posted by HereToLearn — Sun Jun 16, 2024 5:09 pm — Replies 6 — Views 299