I have a traditional IRA that I have contributed the max to in 2018 & 2019. I am covered by an employer-sponsored plan, and all contributions have been after-tax. I am 50+, so the total after-tax is $13,500. The current balance is ~$15,500. I opened a Roth. I want to roll the entire balance in my traditional IRA into the Roth. I have some questions I hoping to get some help with: 1) Is there any limit on the amount I can roll over at one time? 2) I’ll only pay tax on the excess of my after-tax contributions, i.e. ~$2,000? 3) I make monthly contributions to my traditional IRA. Can I roll over quarterly or semi-annually, given there doesn’t appear to be any clear IRS guidelines on this?
Thank you!
1) There is no limit to the amount of your available balance that you are permitted to convert.
2) If you have no other money in traditional IRAs, have $13,500 in basis and convert the entire $15,500 leaving you with $0 in traditional IRAs at the end of 2020, the nontaxable amount will be $13,500 and the taxable amount will be $2,000, determined on your 2020 Form 8606 and included in income on your 2020 tax return.
3) There is no statutory limit to the number of Roth conversions that you are permitted to do in a given period. The IRA custodian could have limitations specified in their IRA agreement, so you would want to check that. All of your transactions will be treated as if they occurred on December 31, so the actual timing of the transactions during the year does not matter.