Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This is OP again. Is there any rush to convert, or can I just leave the money in the traditional IRA, report it as such on my 2023 taxes, and sort this out later?

The "rush" to convert is usually because you pay taxes on any growth, so the sooner you can get it into a Roth the sooner your growth becomes tax-free.

Click the "convert to Roth IRA" button on Vanguard. When you file your taxes either tell your tax preparer what you did, or do it yourself and be sure to file Form 8606. You'll owe taxes on the growth, but if you didn't file taxes yet on the contribution (meaning, if you made the contribution this year), you won't "owe" taxes on the contribution, you just won't be able to deduct the contribution on your taxes.

So when I go to withdraw later I’ll pay taxes on the growth?

No, when you file your 2024 taxes you will pay taxes on any growth for the time period FROM the date you made the Traditional IRA contribution, TO the date of the Roth conversion.

But what if there was no growth. I usually convert within days.

Then you will owe nothing. This year we had $4 of growth in a few days because the settlement funds are paying above 5%, so the interest on $7000 is around $1/day.

Thanks

This is OP. When I do this in the future, shouldn't I just put the money I'm putting into the traditional IRA in cash to avoid having any gains, to avoid those headaches?

Can you convert all the time whenever you want?Or is it like a once a year or one time thing

Anonymous wrote:

Anonymous wrote:This is OP again. Is there any rush to convert, or can I just leave the money in the traditional IRA, report it as such on my 2023 taxes, and sort this out later?

Yes but if it earns any interest you're creating a headache later. Best do it right away.

What's the headache? Does it just cost money or do I need to know cost basis or some other information I might not have?

Anonymous wrote:This is OP. That's not me posting above. (Feel very free to respond. It's just confusing because that person has converted before and I have not.) I have made the traditional IRA contributions over the last year plus, a little bit each paycheck. So I might have some taxes to pay.

How do I report all of this on Turbo Tax?

This is OP again. I mean how do I report all of this on Turbo Tax for my 2023 taxes. Do I just treat it like a traditional IRA?

This is OP. That's not me posting above. (Feel very free to respond. It's just confusing because that person has converted before and I have not.) I have made the traditional IRA contributions over the last year plus, a little bit each paycheck. So I might have some taxes to pay.

How do I report all of this on Turbo Tax?

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This is OP again. Is there any rush to convert, or can I just leave the money in the traditional IRA, report it as such on my 2023 taxes, and sort this out later?

The "rush" to convert is usually because you pay taxes on any growth, so the sooner you can get it into a Roth the sooner your growth becomes tax-free.

Click the "convert to Roth IRA" button on Vanguard. When you file your taxes either tell your tax preparer what you did, or do it yourself and be sure to file Form 8606. You'll owe taxes on the growth, but if you didn't file taxes yet on the contribution (meaning, if you made the contribution this year), you won't "owe" taxes on the contribution, you just won't be able to deduct the contribution on your taxes.

So when I go to withdraw later I’ll pay taxes on the growth?

No, when you file your 2024 taxes you will pay taxes on any growth for the time period FROM the date you made the Traditional IRA contribution, TO the date of the Roth conversion.

But what if there was no growth. I usually convert within days.

Then you will owe nothing. This year we had $4 of growth in a few days because the settlement funds are paying above 5%, so the interest on $7000 is around $1/day.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This is OP again. Is there any rush to convert, or can I just leave the money in the traditional IRA, report it as such on my 2023 taxes, and sort this out later?

The "rush" to convert is usually because you pay taxes on any growth, so the sooner you can get it into a Roth the sooner your growth becomes tax-free.

Click the "convert to Roth IRA" button on Vanguard. When you file your taxes either tell your tax preparer what you did, or do it yourself and be sure to file Form 8606. You'll owe taxes on the growth, but if you didn't file taxes yet on the contribution (meaning, if you made the contribution this year), you won't "owe" taxes on the contribution, you just won't be able to deduct the contribution on your taxes.

So when I go to withdraw later I’ll pay taxes on the growth?

No, when you file your 2024 taxes you will pay taxes on any growth for the time period FROM the date you made the Traditional IRA contribution, TO the date of the Roth conversion.

But what if there was no growth. I usually convert within days.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This is OP again. Is there any rush to convert, or can I just leave the money in the traditional IRA, report it as such on my 2023 taxes, and sort this out later?

The "rush" to convert is usually because you pay taxes on any growth, so the sooner you can get it into a Roth the sooner your growth becomes tax-free.

Click the "convert to Roth IRA" button on Vanguard. When you file your taxes either tell your tax preparer what you did, or do it yourself and be sure to file Form 8606. You'll owe taxes on the growth, but if you didn't file taxes yet on the contribution (meaning, if you made the contribution this year), you won't "owe" taxes on the contribution, you just won't be able to deduct the contribution on your taxes.

So when I go to withdraw later I’ll pay taxes on the growth?

No, when you file your 2024 taxes you will pay taxes on any growth for the time period FROM the date you made the Traditional IRA contribution, TO the date of the Roth conversion.

Anonymous wrote:

Anonymous wrote:This is OP again. Is there any rush to convert, or can I just leave the money in the traditional IRA, report it as such on my 2023 taxes, and sort this out later?

The "rush" to convert is usually because you pay taxes on any growth, so the sooner you can get it into a Roth the sooner your growth becomes tax-free.

Click the "convert to Roth IRA" button on Vanguard. When you file your taxes either tell your tax preparer what you did, or do it yourself and be sure to file Form 8606. You'll owe taxes on the growth, but if you didn't file taxes yet on the contribution (meaning, if you made the contribution this year), you won't "owe" taxes on the contribution, you just won't be able to deduct the contribution on your taxes.

So when I go to withdraw later I’ll pay taxes on the growth?

Anonymous wrote:This is OP again. Is there any rush to convert, or can I just leave the money in the traditional IRA, report it as such on my 2023 taxes, and sort this out later?

The "rush" to convert is usually because you pay taxes on any growth, so the sooner you can get it into a Roth the sooner your growth becomes tax-free.

Click the "convert to Roth IRA" button on Vanguard. When you file your taxes either tell your tax preparer what you did, or do it yourself and be sure to file Form 8606. You'll owe taxes on the growth, but if you didn't file taxes yet on the contribution (meaning, if you made the contribution this year), you won't "owe" taxes on the contribution, you just won't be able to deduct the contribution on your taxes.

Anonymous wrote:This is OP again. Is there any rush to convert, or can I just leave the money in the traditional IRA, report it as such on my 2023 taxes, and sort this out later?

Yes but if it earns any interest you're creating a headache later. Best do it right away.

Google search? https://www.physicianonfire.com/backdoor/

This is OP again. Is there any rush to convert, or can I just leave the money in the traditional IRA, report it as such on my 2023 taxes, and sort this out later?

I've maxed out my TSP. I also put about $5k into a Traditional IRA through Vanguard. I'm doing my taxes now. I earn too much for that $5k to be tax deductible because of the employer-sponsored plan. I'm also over the Roth limit. I think I should pay the taxes on the $5k (well I HAVE to do that) and then do a backdoor Roth. But I don't understand how to do that.

There is a button on Vanguard for "convert to Roth IRA." I assume I want to make sure I only convert the $5k and not more, because of tax implications?

After I do that, how do I report this on my 2023 taxes? Do I just tell TurboTax for my 2023 taxes that I've put the $5k into a traditional IRA? And then whatever happens next is on my 2024 taxes? Or what?

Please help!