I am trying to enter conversion of a portion of funds in an existing Traditional IRA account to an existing Roth IRA account.
I have followed the instructions in the article "How do I enter a backdoor Roth IRA conversion?"
Some of the steps are not intuitive to me and I would like to ask and check if they are correct.
My questions:
1. Does Step 1 (Deductions & Credits section) have to be completed before Step 2 (Wages & Income section)? Or does it matter?
Step 2 has to do with the 1099-R, with where the money is coming from, so it seems like this should be done first.
2. In Step 1. For step 6. of the instructions, "Tell Us How Much You Contributed" screen. Should this be the amount that I am pulling out of the Traditional IRA account to put in the Roth IRA account?
Or should this be $0 since I am not contributing any additional money to my Traditional IRA in 2020?
3. Why does it want me to "Tell Us the Value of All Your Traditional IRA Accounts" ?
Since you are converting money from an existing Traditional IRA to an existing Roth IRA, you are not doing a 'back door' Roth IRA contribution. You are simply converting money from a Traditional IRA to a Roth IRA.
Looking at the steps for the back door Roth, you will only be going through the steps for part 2 -- entering the Form 1099-R reporting the distribution from your Traditional IRA. You do not need to go through the part where you enter the contribution to the Traditional IRA since the money was already there in your case.
So, to answer your questions:
1 - Do not complete step 1; you only need to complete step 2.
2 - You can enter '0' because you did not contribute to the Traditional IRA for 2020, but you do not need to complete this section at all.
3 - You are asked to provide the value of all of your Traditional IRA accounts so that the taxable portion of the Traditional IRA distribution that was converted to the Roth IRA can be calculated. This is especially important if you had both deductible and non-deductible contributions to the Traditional IRA.
Since you are converting money from an existing Traditional IRA to an existing Roth IRA, you are not doing a 'back door' Roth IRA contribution. You are simply converting money from a Traditional IRA to a Roth IRA.
Looking at the steps for the back door Roth, you will only be going through the steps for part 2 -- entering the Form 1099-R reporting the distribution from your Traditional IRA. You do not need to go through the part where you enter the contribution to the Traditional IRA since the money was already there in your case.
So, to answer your questions:
1 - Do not complete step 1; you only need to complete step 2.
2 - You can enter '0' because you did not contribute to the Traditional IRA for 2020, but you do not need to complete this section at all.
3 - You are asked to provide the value of all of your Traditional IRA accounts so that the taxable portion of the Traditional IRA distribution that was converted to the Roth IRA can be calculated. This is especially important if you had both deductible and non-deductible contributions to the Traditional IRA.