Retirement tax questions

Q1. No, you won't have a basis left in your traditional IRA if you make the contribution for the same year you convert the fund. For example, make a contribution for 2021 and convert it right away in 2021. 

Q2. Yes, it is always good to track your basis. You will need to track direct contributions and conversions separately. You can track your basis during the IRA contribution interview.

1.  Click on "Search" on the top right and type “IRA contributions” 
2. Click on “Jump to IRA contributions"
3. Select “traditional IRA” and "Roth IRA"
4. Answer questions in regards to your traditional IRA
5. On the "Roth IRA Contributions" screen answer "No"
6. On the "Did You Open a Roth IRA Before 2021?" answer "Yes"
7. On the "Let Us Track Your Roth IRA Basis" screen answer "Yes"
8. TurboTax will ask you follow-up questions in regards to net contributions and conversions.

Q3. Yes, that is true. Once you are 59 1/2 and had the IRA for 5 years then your distributions are Qualified Distributions and the basis doesn't matter since the whole distribution is tax-free. Please be aware, that TurboTax might still ask for the net contributions and conversions during the interview.

Q4. The 5 years start when you made your first contribution to the Roth.