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CASH in my traditional IRA

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  • CASH in my traditional IRA

    My income is high and I only can do back door. So I opened a traditional IRA with fidelity added money there and then converted the whole money to Roth IRA. Today I see 100$ cash in my traditional IRA . It is cash offer from fidelity. Am I going to be in trouble with IRS? I understand there should not be any money in traditional IRA by the end of this year. If having this money in my traditional is going to be trouble down the road what should I do ? I had no idea fidelity will do this.

  • #2
    You will be subject to the pro-data tax of your conversion but that should be small, 1/60 of the conversion is taxable. Alternatively you could just convert the $100 welcome gift and pay the tax at you’re marginal rate. Devalues the gift but you’re going to have to pay tax on it and it’s earnings at some point anyways.