Please be aware that conversion will be listed under distributions and generally conversions from a traditional IRA to Roth IRA are taxable because you move pre-taxed funds into an after-tax account. Therefore, you will have to pay taxes on any amount that is converted that isn't covered by a basis. As mentioned before because of the pro-rata rule only a small part of the conversion is allocated to have a basis therefore most of your conversion is taxable.
Yes, funds in the Roth IRA will be growing tax-free and if you take later Qualified Distributions then these distributions will be tax-free. With nonqualified distributions, the earnings will be still taxable.
@omkarprabhu
@GT0934 If you have a retirement plan at work and are over the income limit it will be nondeductible automatically and you only get a warning that it isn't deductible because of your income. The next screen will say $0 is deductible.
I verified that your $6,000 contribution is nondeductible. But you had pre-tax funds in the traditional/SEP/SIMPLE IRAs and therefore the pro-rata rule applies. Each distribution/conversion will have a taxable and nontaxable part.
TurboTax used the IRS Worksheet 1-1. Figuring the Taxable Part of Your IRA Distribution to calculate the nontaxable part. And since you seem to have pre-tax funds left in your traditional/SEP/SIMPLE IRAs only a small amount of the conversion will be tax-free. The rest of the basis is carried forward on line 14 of Form 8606 for future distributions/conversions.
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