Very basic back door Roth conversion questions

[HLM]

I opened a traditional IRA account at Vanguard, placed $5500 into it yesterday and then converted it to a Roth IRA today.

When I did the conversion, the traditional IRA account had $5500.05 in it because of a dividend that was reinvested in the account but I only moved the $5500.

What will happen to the $0.05 in the traditional IRA account? Will having 5 cents in the traditional IRA have the essentially the same impact as having 0 cents because $5500/$5500.05 is essentially the same number as $5500? Should I have moved the 5 cents over with the rest of the $5500? Should I do that now?

 

[jfoxcpacfp]

The nickel is what cpa's call ncm - not considered material. Just close the account and don't think about it any further. Not worth the trouble of converting to the Roth. Be sure to file your form 8606 for 2016 .

[HLM]

Do I have to close the account? Shouldn't I leave the account open to deposit money in 2017 to covert to a Roth?

 

[jfoxcpacfp]

No, you don't, as long as Vanguard is ok with it (and I'm pretty sure they are). In fact, our clients leave a few dollars in their accounts until the next year and we just repeat the whole process.

[childay]

Yep I leave mine open for the next year too.

[Joseph]

Not sure why Johanna suggested to close the account (?) but you want to leave it open for next year.

Regarding the process, I do it a little differently than others and always have a little more than $5500 when I put it into a Roth.  I am fine paying the tax amount of a quarter or $5, so I always convert 100% of the balance from the tIRA to the Roth.

[jfoxcpacfp]

Joseph wrote:

Not sure why Johanna suggested to close the account (?) but you want to leave it open for next year.

Click to expand...

Well, when I began posting on this forum, I always recommended keeping the account open and, at one point, WCI (or maybe another poster) said there was no reason to keep it open so I figured that was just protocol for you guys. Maybe I can find the post, but I'll have to scroll through a lot of messages - probably not worth the trouble. We keep ours open all year.