Retirement tax questions


@Katerinablondy wrote:

Thanks for this post. I am just about ready to file but we are confused on how to report it. We contributed before April 2021 for 2020, and now we are getting double reporting for 2021.  How do we indicate that half of the contribution is for 2020?  


Contributions made up until 4/15 can be backdated to the previous year.

 

Conversions and rollovers happen on the day they happen and can't be retroactive.  

 

However, this makes little difference.  If you make a non-deductible traditional IRA contribution and roll it over to a Roth IRA (the "backdoor Roth") it doesn't have to happen in the same tax year.  You can make a contribution in 2022 that is retroactive to 2021, and then convert it in 2022, and it won't change your taxes or cause problems.  The contribution will be reported on your 2021 tax return and the conversion in 2022.

 

Just beware, that a backdoor Roth doesn't work if you have a deductible balance in any traditional IRA (all IRA account balances are added together when you do the conversion).  If your only balance is non-deductible, it will work.  If you have a IRA that was funded by deductible contributions, you have to convert it (and pay tax) all at the same time.