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  • Quick Backdoor Roth Question

    I have a quick backdoor Roth question. First time doing it. Followed the WCI blog post. Added 6K to a traditional Roth with Fidelity. Had to wait longer than I expected for it to clear (maybe 7 days), went straight into SPAXX. Immediately after it cleared (same day), I did the conversion. Didnt think about it again until now. I now see on my end of year statement that I was paid a $0.01 dividend on 12/31/20.

    I know that I am supposed to have a $0 balance at year end to avoid the pro-rata rule, and got comletely blindsided by this. Is ths a major issue? Do I need to do anything to avoid a tax hit? Thanks in advance for any replies!

  • #2
    Uh oh, you're scr3w3d!!!!

    Actually, it is NOT an issue. Just ignore it until next year or go ahead and make your 2021 BD Roth and convert it all if it really bothers you to have it there.
    Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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    • #3


      Originally posted by Boston_Red View Post
      I have a quick backdoor Roth question. First time doing it. Followed the WCI blog post.
      Added 6K to a traditional Roth with Fidelity.
      -- whats a traditional Roth....

      Originally posted by Boston_Red View Post
      Had to wait longer than I expected for it to clear (maybe 7 days), went straight into SPAXX.
      -- normal

      Originally posted by Boston_Red View Post
      Immediately after it cleared (same day), I did the conversion. Didnt think about it again until now. I now see on my end of year statement that I was paid a $0.01 dividend on 12/31/20.
      -- thats why we say convert 100%, not a dollar amount.

      Originally posted by Boston_Red View Post
      I know that I am supposed to have a $0 balance at year end to avoid the pro-rata rule, and got completely [sp] blindsided by this. Is this [sp] a major issue? Do I need to do anything to avoid a tax hit? Thanks in advance for any replies!
      -- you will have to report all remaining t/sep/simple IRA balances on 12/31 into your 8606 and pay pro-rata tax.
      -- you should do your own taxes or at least play around with free software. what does $0.01 get entered as......?


      linked: https://forum.whitecoatinvestor.com/...-ira-home-base

      so now that you are set, when you do 2021....make sure you convert 100% including anything remaining.

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      • #4
        Originally posted by Peds View Post
        so now that you are set, when you do 2021....make sure you convert 100% including anything remaining.
        Thanks - that was very helpful, as was the link...I should have looked harder at your sticky post before posting.

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