@bhJogdt wrote:
yes I have fund from previous years deductible IRA and this year I am not eligible for deductible IRA so I made a contribution in April 2023 and bought equities.I moved equities to Roth IRA around 6488.(2023 limit).Is it going to be an issue ?
You will owe some tax. When you do this kind of rollover, it is pro-rated. You can't only rollover the non-deductible portion. For example, suppose your previous balance of traditional IRA funds was $20,000. You contributed $6500 of non-deductible funds, meaning that 24.5% of your balance was non-deductible. When you did the $6500 conversion to a Roth IRA, 24.5% of the conversion is non-taxable ($1592) and the other 75.5% ($4908) is a taxable conversion of the deductible balance. Then, since you rolled over $1592 of non-deductible funds, your remaining IRA balance after the rollover still contains $4908 of non-deductible funds. Turbotax will generate a form 8606 to track your non-deductible IRA balance, and you must keep a copy of this form for the rest of your life (or until 3 years after you have no more traditional IRAs.) You will use your 2023 form 8606 to prepare your 2024 return or whenever you either make more non-deductible contributions, or conversions, or withdrawals, from a traditional IRA.
