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@gehua wrote:
Thanks for the tip. I gave a try on No.2 "did a combination of rolling over, converting, ..." but it did not work as expected.
After pick that option, I picked "did not make or track nondeductible contributions to xx's IRA". Then it asked me about "total value of all xx's traditional IRA SEP SIMPLE IRA accounts on 12/31/2020. This information is sent by mail on Form 5498". First, I don't have form 5498. Second, Any value entered here (other than 0) resulted in tax increase, which was against the intent of Roth IRA conversion.
You get the year end value from the December statement for your account (or accounts if more then one). You do not need a 5498 form.
Yes, when you enter the year end value the tax will appear to go up - that is the purpose. Without the year end value ALL the remaining non-deductible basis will be applied to the conversion instead of just a prorated portion as tax lay requires. That might look good now with lower tax, but not so good when the IRS audit letter comes in a year of so with a big bill for back tax and penalties.
The calculation is done on the 8606 form lines 1-15.
