dmertz
Level 15

Retirement tax questions

Had the $100 been a bonus provided outside the traditional IRA and then included as part of a total $1,100 of contribution, I would expect that the broker would have been required to issue to you a Form 1099-INT reporting the $100 of income.  Instead, it seems that you made a $1,000 nondeductible traditional IRA contribution and the $100 bonus represents taxable earnings in the traditional IRA, not separately reportable income, but to be certain you would want to review the 2023 Form 5498 from your traditional IRA.  Assuming the latter, with no funds in any traditional IRA at the end of 2023, your Roth conversion would be $100 taxable and $1,000 nontaxable, resulting in $100 of taxable conversion basis and $1,000 of nontaxable conversion basis being added to your Roth IRAs for the purpose of determining the tax consequences of taking a nonqualified distribution from any of your Roth IRAs.

 

 

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