I entered the balance of my traditional IRA account as of Dec 31 ($10k in my example) and my tax liability went up significantly. Why does this happen? These are after tax dollars that were contributed over the years. There were no early disbursements, just a conversion of new contributions to a Roth during the year.
For example:
- Existing Traditional IRA balance Dec 31 2020: $10K
- New 2020 Traditional IRA contributions: $6K
- 2020 Conversions from Traditional to Roth: $6K
