Backdoor Roth questions

[DSM]

I did backdoor Roth for the first time last week. I put 5.5K in the TIRA and then convert to Roth in couple days. Now, I have 0.63$ (money market gain in 2-3 days)sitting on the money market fund in the TIRA. Do I need to keep that over there or I need to withdraw/exchange?

[mamaham]

https://www.whitecoatinvestor.com/pennies-and-the-backdoor-roth-ira/

fortunately, Dr. Dahle already answered this question... check out his blog post...  should clear things up...

[DMFA]

DSM wrote:

I did backdoor Roth for the first time last week. I put 5.5K in the TIRA and then convert to Roth in couple days. Now, I have 0.63$ (money market gain in 2-3 days)sitting on the money market fund in the TIRA. Do I need to keep that over there or I need to withdraw/exchange?

Click to expand...

Convert it.  That $0.63 rounds up to $1, and you'll add $1 to your taxable income, meaning at most $0.40 in taxes.  Life somehow goes on...

[DSM]

@ DMFA-

Thanks for the screen shot. Is the line 4 would be 5500 and 5 would be 0?

 

[DMFA]

DSM wrote:

@ DMFA-

Thanks for the screen shot. Is the line 4 would be 5500 and 5 would be 0?

 

Click to expand...

No, that's only if you make it for the prior year before taxes are due, such as if you made contributions *for* 2017 late (from Jan-Apr 2018).

Most people's form 8606 should look like the screenshot.  Since you did it last week, then it can only be for 2017, and would be $5,500 on lines 1,3,5,11,13,17.  That $0.63 (rounded to $1) makes the amount you converted and its derivatives (lines 8,9,16) $5501, meaning you'd have $1 of taxable income.

Contributions are *for* a year (i.e. can be made late), but conversions are *in* a year.  Your contributions *for* 2018 won't go on your 2017 taxes, even if you do the contribution before filing; they'll go on there next year.