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Get your taxes done using TurboTax
Macuser,
(You mentioned that $3000 was all you could afford, but the only reason that a "Backdoor Roth" is used to allow taxpayers that have an income so high (Married jointly over $190,000) that they cannot contribute directly to a Roth IRA, but do it "backdoor". If your MAGI is less than that and you want a Roth then just contribute to a Roth in the first place and don't mess with a "backdoor".)
Answer: my wife makes lots more money than i do ever since I cannot remember, the total joint income has been over the limits or over the adjustable gross income depending on which year it is, she has been contributing nondeductible IRA contributions all these years consistently even before the back door roth conversion came about. I, on the other hand, made small traditional IRA contributions whenever I could, which was seldom. She and I were unaware of the backdoor roth conversion and I just learned about it recently. I will help my wife asking the experts here questions about helping her doing roth conversion of her IRA contribution from all these year at another time. Today I want to focus on my pending 8606 and I want to do the back door roth conversion soon.
I will answer your questions in the same order of your questions.
That "procedure" can only work of all these requirements are met otherwise there will be some tax.
1) No Traditional IRA account whatsoever can exist (that includes any SEP or SIMPLE IRA accounts) at the start.
Answer: I only have one personal IRA account at this time with fidelity. I do have a 401K at work but it is not an IRA. I do not remember well but I may have started it out with a deductible IRA account with Schwab before I got married, but I lost 99% of my contribution from poor choice of stock investment over the years. I believed I must have rolled the remaining IRA to a rollover IRA account at Fidelity in the early 2000s. Today, the balance of my rollover IRA is $277. I lost money from having invested in stock. I believe I opened up a traditional IRA account at Fidelity in the early 2000s and contributed little money in there. My traditional IRA record is only as good as what Fidelity can provide which goes back to 2012. Apparently the balance in my tradditional IRA shows about $220 to $250 from 2012 to 2015 until I made a significant contribution amount of $3000 in 2016, and $2000 so far in 2020. Recently I learned about back door Roth contribution, and this is exactly what I want to do as soon as I file the 2016 form 8606. The thing that is going for me is that whatever contribution i had contributed before 2016, I lost almost all of my contribution money . It is like I am starting my life over with my first IRA contribution in 2016. Question: does that sound right to you?
2) The Tradition IRA contributions must be reported on a 8606 form as non-deductible. Answer: I am filing the 2016 form 8606 today and i will file the 2020 form 8606 when we do the tax filing in April of 2021.
3) The conversion to a ROTH must be shortly after the contribution to avoid taxable gains. Answer: Yesterday I converted the $2000 from this year 2020 traditional IRA to the roth IRA at Fidelity. I plan to convert the remaining balance of $2,200 (contributed in 2016 ) after I mail in the 2016 form 8606
4) The entire Traditional IRA value must be zero that the end of the year of conversion: Answer: This is a new piece of information for me, but I believe I can convert the remaining IRA balance to the roth account within the next couple days after I have proof of sending in my 2016 form 8606.
Please let me know what you think of my answers. Im running to the post office right now to mail out the 8606 .
Talk to you later. Thank you for your help