dmertz
Level 15

Investing

Both Roth conversions which were done in 2023 are taxable on your 2023 tax return.  Due to the rollover of the 401(k) to a traditional IRA, this balance in the traditional IRA will be included in the pro-rata calculation of the taxable amount of the Roth conversions.  The only way to avoid this would be if you could roll the traditional IRA over to a 401(k) or similar employer plan before the end of 2023 so that it would not be included in the year-end balance required on Form 8606 line 6.

 

See the following IRS information on underpayment of taxes to see if you might have to increase tax withholding or make estimated tax payments to minimize any underpayment penalty on your 2023 tax return:

https://www.irs.gov/payments/underpayment-of-estimated-tax-by-individuals-penalty