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Retirement tax questions
Let’s go back to the beginning.
First, you made a nondeductible contribution to a traditional IRA. This must be reported on the tax return for the year in which the contribution was made, whether 2022 or 2023. The contribution limit is $6000 for a contribution made in 2022 and $6500 for contribution made in 2023, unless you are age 50 or older. When you report the contribution on your tax return, it will generate a form 8606 that you must file with the rest of your tax return.
Then, you did a conversion (which is a particular type of rollover) from the traditional IRA to a Roth IRA. There is no specific dollar limit on rollovers or conversions, and conversions do not count against your contribution limit. If your income permitted it, you could still make direct contributions to the Roth IRA of up to $6500 even though you have already done a conversion. The only limitation on how much of an IRA conversion you can perform in one year is how much tax can you afford to pay (when converting a pretax balance to a Roth).
So there is no difficulty with converting $6501.
In the year that you made the conversion, you will also report that on your tax return, and it will be reported in a separate section of form 8606.
Note that if you had any traditional pretax balance in any IRA account, then your conversion will only be partly tax free. A “back door Roth conversion“ only works correctly if you have no traditional pretax IRA balances. If you have a pretax IRA balance, even if it is in a different account or held with a different broker, then your conversion is not a true back door conversion, and you will pay some income tax. We can explain this further if needed.