@afawalk69 wrote:
If your traditional ira made $200 in growth, can you even convert that growth into your ROTH ira with the $7,000?
OR
do you have to leave the $200 in the traditional as you would be over the $7,000 limit (TY2024 in this example)?
You can do either, but the paperwork gets really messy if you try to leave the growth in the traditional IRA. It defeats the purpose of the "backdoor" Roth process to leave pre-tax money in the traditional IRA. You want to convert the entire balance. Because the growth was tax-free, that portion of the conversion will be taxable income in the year of the conversion, but then it will not be taxable again since it is in the Roth. For this reason, most people make their traditional IRA contribution into a cash or money market account and do the conversion within a few days so there is very little growth.
