I contributed $8000 to an IRA (I'm 50+) and the funds grew to $8300'ish - in December I moved all funds in the standard IRA account ($8300) to the Roth backdoor account. I'm now doing my taxes, and TT is telling me there is an excess of 300 and a penalty involved.
Was I only supposed to transfer exactly $8000 from the traditional IRA into the Roth backdoor and leave the remaining balance ($300) in the standard IRA?
Thanks in advance...
Upon reporting a Trad IRA contribution (non-deductible) on your tax return, you can then also report a Roth conversion of the contributed amount for net tax of zero, unless your IRA previously had value exceeding basis.
In that case, it can't be done tax free.
to report a non-deductible contribution, Form 8606 must be attached.
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Since you converted an extra 300, you pay tax on that. there is no penalty for doing that.
No, you don't need to leave part in the traditional IRA. You can convert the full $8,300. Please make sure you do not select that you moved the fund to a Roth IRA in the IRA contribution interview.
Please review How do I enter a backdoor Roth IRA conversion?
Upon reporting a Trad IRA contribution (non-deductible) on your tax return, you can then also report a Roth conversion of the contributed amount for net tax of zero, unless your IRA previously had value exceeding basis.
In that case, it can't be done tax free.
to report a non-deductible contribution, Form 8606 must be attached.
--
Since you converted an extra 300, you pay tax on that. there is no penalty for doing that.
I just got off the phone with Fidelity, the representative said there is not Roth IRA contribution limit so contributing $8300 should not be an issue. The $8000 is the Federal limit for Traditional IRA. It sounds like I pay the tax on the $300 and I'm good - I must have entered it incorrectly previously to get to the penalty message. Thanks for the help.
The $8000 is also the Federal limit for Roth IRA contribution.
You did not do a Roth contribution.