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Dividend in TIRA after Backdoor

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  • Dividend in TIRA after Backdoor

    Did two backdoor Roth IRA contributions this past week, one of them did this:

    01/06/2017VMMXXVANGUARD PRIME MONEY MARKET INVESTOR CL
    Dividend------ $0.11

    01/06/2017--VANGUARD FEDERAL MONEY MARKET FUND (Settlement Fund)
    Sweep in------  (–$0.18)

    01/05/2017VMMXXVANGUARD PRIME MONEY MARKET INVESTOR CL
    Conversion (outgoing)– 5,500.0000---- (– $5,500.00)

    01/05/2017--VANGUARD FEDERAL MONEY MARKET FUND (Settlement Fund)
    Dividend------$0.07

    01/04/2017VMMXXVANGUARD PRIME MONEY MARKET INVESTOR CL
    Buy5,500.0000$1.00Free (– $5,500.00)

    NGUARD FEDERAL MONEY MARKET FUND (Settlement Fund)
    Sweep out------$5,500.00


    01/04/2017--From: BANK
    Contribution------$5,500.00

    01/04/2017--VANGUARD FEDERAL MONEY MARKET FUND (Settlement Fund)
    Sweep in------ (– $5,500.00)

    -----------------------

     

    So I guess my questions is, what do I do with the .18 cents in my TIRA?  Convert it again to my Roth? Guess I dont understand why only one account did this.

  • #2
    That was a lot of typing for 18 cents. Just leave it alone and move it next year if you want to zero the account. I don't think the IRS pays attention if it's under $10, and most certainly not if under $1.
    Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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    • #3
      If you converted 100% shares, rather than $5500, the dividend in the tIRA will eventually sweep into the Roth account. If not just leave it and convert next year.

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      • #4
        If you do convert the dividend into the Roth account this year then I think you will be subjected to tax on that 18 cents based on your marginal rate....really inconsequential. I don't think the IRS really cares.

         

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        • #5
          you only get one conversion per year. so nothing to do this year.

          next year convert again, choose 100%, and pay the tax on the pennies you owe, which will round either to zero or 1 $ based on interest rates haha.

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          • #6




            If you do convert the dividend into the Roth account this year then I think you will be subjected to tax on that 18 cents based on your marginal rate….really inconsequential. I don’t think the IRS really cares.

             
            Click to expand...


            The IRS only cares about whole dollar amounts so $5500.18 would round down to $5500 anyway.

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            • #7
              I think you are talking about the IRA one rollover per year rule. This rule does not apply towards traditional to Roth IRA "conversions" per IRS publication. There is no limit for conversions. Nonetheless tax consequence is trivial whether you do it this year or next.

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