@Zane222 wrote:
Thank you so much for your insightful answer! I am thinking I will try to do the backdoor method as I do not have anything in a traditional IRA. Would contacting Schwab to set this up be a wise choice?
You can use any broker you want. The important thing is to do it in the right order. Hopefully they will have advisors who can help with this. First, you have to recharacterize the Roth contributions to a traditional IRA. Then, after that has completed, you do a rollover/conversion from the IRA to a Roth IRA. (You may need to wait a few days for the first transaction to settle.)
The deadline to recharacterize the Roth contribution to a traditional IRA is the tax filing deadline (April 15, 2024). The conversion will be reported on a 1099-R in whatever year it occurs (2023 or 2024) but since only the gains (if any) will be taxable, there's no special rush to get it done before the end of 2023 (and it might be impossible to complete both steps before the end of the year, since there are only 4 working days left in the year.
On your tax return, you would report that you made a non-deductible contribution to a traditional IRA. This will generate a form 8606. If you complete the conversion this year, that will also be on form 8606, if you do the conversion in 2024, you will use the information from the 2023 form 8606 to report the conversion on your 2024 return.
