@anbuitachi wrote:
I see. So this means later down the line if i have lets say 30000$ in traditional IRA. I can roll all of it to roth at once?
A rollover from a traditional IRA to a Roth IRA is also called a conversion. You can do this at any time, with all or part of your IRA balance. The conversion will be reported on a 1099-R as of the date it actually happens, conversions can't be back-dated like contributions sometimes can be.
If the original contributions to the traditional IRA were all tax-deductible when made, then the Roth conversion amount (contributions plus earnings) is subject to regular income tax. If all the original contributions to the traditional IRA were non-deductible when made (and documented on form 8606 as part of your tax return) then the Roth conversion (contributions plus earnings) is non-taxable.
Where you get into trouble with a "backdoor" Roth conversion is if part of your traditional IRA contributions were tax-deductible and part were non-deductible. And all your IRAs are counted together for this purpose, meaning that if you had a traditional IRA with Merrill Lynch that was deductible, and a traditional IRA with Fidelity that was made with non-deductible contributions, the IRS will still consider that you have one combined IRA balance that is partly deductible and partly non-deductible. I don't know if that is your question here, so I won't go into detail, but we can explain if you want more information.
