I’m confused after talking to someone from fidelity. Are the 6k I transfer from a traditional IRA (which I opened for Backdoor Roth only and has no other funds) to an IRA Roth taxed again? If yes how much is it taxed? The 6k will be post tax money as I will initiating it from mu checking’s account. Fidelity representative told me that this conversion from trad Ira to Roth IRA triggers a tax event?
Thanks #personalfinance #investments
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Further still, it may not hold on the inflationary event where high percentage of population loses income and can't rent.
Fidelity will send you a 5498 that shows the contribution of 6K to the IRA, another 5498 for Roth contribution (ie transfer), and a 1099R for the 6K leaving the traditional account. When you file, you'll need to fill out an 8606 for the initial contribution.
When you do this 8606, turbotax will ask you if this is part of a backdoor roth conversion. Click yes, and the software will balance everything out for you.
The online form asks if I want to withhold taxes I say no. Just make sure three things
1. The money you convert was not used as a tax deduction
2. Make sure you only have 1 traditional Ira. It’s ok to have multiple 401ks. But the moment you roll 401k down into that traditional Ira you are going to encounter difficulties doing backdoor on just 6000. The form is simple if you can zero out the account after conversion
3. At tax time fidelity will report 6000 as income. So you need to get the correct forms/tax software to recognize this.
You can do this online. No need to call