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supersonic_528 OP t1_iuipyot wrote

Reply to comment by DeluxeXL in After-tax 401K to Roth IRA -- pro rata taxes by supersonic_528

As I mentioned earlier, my traditional IRA account does not have any pre-tax contributions. It, however, does have a small amount of gain (about $150), which is obviously not taxed (yet). I was wondering that in order to avoid the complications with pro-rata tax calculation associated with my regular backdoor Roth conversion (after-tax traditional IRA to Roth IRA) that I do every year, if it's better to simply not have any pre-tax money in my traditional IRA account. This will mean that I move this $150 too to the Roth IRA. However, I'm not very clear about the process. Do I just move the entire $150 now, and then pay the tax on that $150 when I file my taxes next year? Thanks!

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DeluxeXL t1_iuir0h5 wrote

It doesn't matter when you do it. You only need to do it once. Easiest is to do it at the same time when you do regular backdoor Roth.

  1. Contribute $6000
  2. Convert $6150.49
  3. Report the $150 income (Form 8606 parts 1 and 2, carried onto Form 1040)
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