I have IRAs with 4 brokers (4 traditional IRAs and 4 Roth IRAs), traditional IRAs are used backdoor Roth conversion.
It was not my intention to open accounts with so many brokers, sometimes I move from one broker to another, due to some reasons.
Now I am almost inactive with two of brokers, and I am thinking about contribute 1 cent to each of those two accounts, then contribute $6999.98 to remaining two traditional IRAs (for backdoor Roth conversion).
I don't want to keep traditional IRA balance as $0 for too long. I don't want brokers to close $0 traditional IRAs. Of course I can open new traditional IRAs if they close $0 balance accounts, but prefer to keep old traditional IRAs (with same account number, and setting lie account order, account nickname etc). Therefore I don't want to keep account at $0 balance.
If 1 cent traditional IRA complicates tax filing, then I will leave $0 balance traditional IRAs alone. I cannot imagine that there is 1 cent on tax form, when I enter 1 cent to tax software, it becomes 0, which may cause error.
Okay, let me summarize, if I do something as below, how will it end up for tax filing. All 4 traditional IRAs are $0 now
Broker #1: 1 cent contribution to traditional IRA, no backdoor Roth conversion.
Broker #2: 1 cent contribution to traditional IRA, no backdoor Roth conversion.
Broker #3 & #4: contribute $6999.98 to two traditional IRAs, then convert $6999.96 to Roth IRAs, and also leave 1 cent on each traditional IRA.
I feel like I should make $1 to broker #1 traditional IRA, and make $1 contribution to broker #2 traditional IRA, otherwise 1 cent is not reportable. Maybe I am wrong, we never report IRA contribution on tax return, correct? Only report backdoor roth conversion, correct? So it is fine to contribute 1 cent to traditional IRAs? Will broker generate Form 5498 for 1 cent contribution?
The reason I want to contribute 1 cent: I do backdoor roth conversion every year, and I want to keep previous year's traditional IRA basis as low as possible, a few cents (total 4 cents for 4 accounts) will be rounded down to $0. Keep future tax return numbers for backdoor roth conversion clean and neat.
