Backdoor roth leftover

[kather]

Hey all, had an issue, hoping to get some advice.

Did backdoor Roth at Fidelity, no issues. Went back to look at accounts several weeks later, and now there $0.01 in traditional IRA. Must have accrued interest in the day or so before conversion. What is my best move now? I know the math works out so that it probably doesn't matter with the pro-rata rule, nor with tax on conversion. Should I leave it in the traditional IRA? Convert it to Roth? If I convert to Roth will I have to complete two separate 8606 forms since there were two transactions?

Thanks for any help.

[JBME]

Did you convert $6k earlier this year? Convert the penny today...certainly before Dec 31....and you'll pay tax on the penny at your marginal rate....which will round down to $0. You don't need to do two separate 8606 forms if you're talking about all of this happening this year

[StateOfMyHead]

Did you convert $6k earlier this year? Convert the penny today...certainly before Dec 31....and you'll pay tax on the penny at your marginal rate....which will round down to $0. You don't need to do two separate 8606 forms if you're talking about all of this happening this year

I was wondering also because I ended up with a few cents in mine while awaiting the closure of my SEP IRA. My question would be however if we can just add extra money and pay the marginal rate why couldn't we put an extra $500 in? Sorry if this is a stupid question, 2020 was my first year doing the back door Roth.

[CordMcNally]

I was wondering also because I ended up with a few cents in mine while awaiting the closure of my SEP IRA. My question would be however if we can just add extra money and pay the marginal rate why couldn't we put an extra $500 in? Sorry if this is a stupid question, 2020 was my first year doing the back door Roth.

Because there's a contribution limit.

[StateOfMyHead]

Because there's a contribution limit.

Yes which if I understand it is $6,000 not $6,000.01 right?

[jfoxcpacfp]

You just pretend like it’s not even there. There is no “best move”, it’s inconsequential, happens all the time.

[artemis]

Yes which if I understand it is $6,000 not $6,000.01 right?

A contribution is not the same as a conversion. The IRS sets annual limits on contributions, but there are no limits on the amount you can covert. If you had a million dollars in your IRA you could roll it all into your Roth IRA so long as you could afford the taxes you'd owe. You contributed $6,000.00, the annual limit for people under 50, but you are now converting $6,000.01.

(Note: There MAY be limits on Roth conversions in the future, based on the person's annual income. But right now anyone at any income level is free to do conversions.)

[CordMcNally]

Yes which if I understand it is $6,000 not $6,000.01 right?

And the OP contributed $6,000. It just happened to gain some interest while sitting there for a few days. artemis covered it.

[kather]

Thanks everyone for the info.