You do not keep track of what is actually happening inside the account. You just record in TurboTax (or on paper or computer, it is best to have more than one location) that you had a net contribution of $1,000 (before taking any distributions) and you enter your conversion on the next screens (TurboTax will ask for taxable and nontaxable conversions within the last 5 years). Let's say that it was nontaxable conversion of $1,000 to keep it simple.
Then the $1,000 distribution in 2021 will still be tax- and penalty free. TurboTax will record that you now have $0 net contributions and still $1,000 nontaxable conversion from 2018.
@Aquarius5
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