Hello,
I hope all is well and thank you in advance for your assistance. I am 57 years old and making IRA contributions to include catch up contributions.
Background. For the past few years my modified AGI has exceeded the limit for me to contribute directly to my Roth IRA so I have had to make a non-deductible contribution to a Traditional IRA and then convert 100% of the Traditional IRA contribution to my Roth IRA (i.e. Backdoor contribution). Since I learned about the “Backdoor contribution” a little too late in the tax year, for each subsequent tax return I have always waited until after January 1st (but before April’s tax filing deadline) to contribute to a Traditional IRA and then perform the conversation a few days later. The contribution and conversion have always been for the previous tax year. I love Turbo Tax but for me, the steps for correctly inputting the contribution and back door conversion for the previous tax year is a bit of a pain for me (even though I’ve saved the instructions provided in Turbo Tax each year.)
Q1: My first question is, can make a one-time lump sum contribution to a Traditional IRA and convert the entire amount in the same tax year of my return? (or must I wait until after January 1st to make the Traditional IRA contribution and conversion for the previous tax filing year?)
The rest of the story. In early April 2022, I made a one-time lump sum $7000 contribution to a Traditional IRA and then a few days later converted 100% of the Traditional contribution to my Roth IRA, all prior to the April tax filing deadline. For 2022 I expect to receive (as with previous years) a 1099-R for the Traditional IRA conversion (Box 7 – Code 2 – early distribution, under age 59 1/2). However, because this contribution and conversion were prior to the April tax filing deadline, this contribution/conversion is for the 2021 tax year.
Now for the hard part: Since I’ve already contributed $7000 to my Traditional IRA and converted 100% of the $7000 to my Roth IRA in April 2022 (again for the 2021 tax year) can I make another contribution/conversion in 2022 for the 2022 tax year so the process of filing my 2022 tax return is simpler (vs. having to annotate that my 2022 IRA contribution/conversion is for the 2021 tax year?)
Q2: If I make a second contribution to a Traditional IRA and convert it to a Roth IRA in 2022 will the 2022 1099-R shows that I contributed/converted $14,000 for 2022? If so, how hard will this be to explain in Turbo Tax? And will this generate a red flag?
My intent is to get back on track with my Traditional to Roth IRA conversion going forward, if that’s possible.
Thanks again for your help.
r,
Allen
