Roth IRA contribution and backdoor conversion in March

[2Double]

Hi,

I want to open Roth IRA account in March and contribute for the year 2023 and file the tax at the end of March. it should be backdoor conversion.

Does it make the filing complicated? I don't think the broker will send the roth IRA form before filing the tax.

Thanks

[RachelW33]

No, it doesn't make things complicated at all.  Roth IRA contributions are not reported on your tax return.  You can go ahead and file your tax return, you don't have to wait until you make the Roth contribution.  Be sure to open the Roth IRA by 4/15/24 and make sure that you specify that it is for tax year 2023.

For more information about Roth IRA's, including limitations based on your income and filing status, please see IRS link.

[2Double]

It has to be back door Roth IRA, so I will owe tax on the contribution, correct? broker sent a form and I enter in turbotax return. that's why I wonder if that makes it complicated. pls help. thanks

[Bsch4477]

The tax return filing date is independent of when you do your Roth contribution as long as both occur before April 15. 

[Bsch4477]

If you are doing a back door Roth now the events will be reflected in your 2024 tax return. 

[2Double]

yes I should do backdoor. so my concern is I may not receive the form from broker to file in my tax before 4/15/24.

[RachelW33]

No, you will not receive the form from the broker until 2025 and it will be reported on your 2024 return.

For your 2023 return, you need to enter your non-deductible IRA contribution, which flows to Form 8606.

From the TurboTax Help article, here are the steps to do so: 

1. Sign in to your TurboTax account.
2. Open your return if it’s not already open.
3. Select Federal from the menu, then Deductions & Credits.
4. Locate the Retirement and Investments section and select Show more.
5. Select Start or Revisit next to Traditional and Roth IRA Contributions.
6. Check the Traditional IRA box and select Continue.
7. Answer Yes to the question, Did you Contribute To a Traditional IRA?
8. Answer No to the question, Is This a Repayment of a Retirement Distribution?
9. On the screen, Tell Us How Much You Contributed, enter the amount contributed and select Continue.
10. Answer No on the screen Did You Change Your Mind?, then answer the questions on the following screens.
11. When you reach the Choose Not to Deduct IRA Contributions screen, select Yes, make part of my IRA contribution nondeductible, enter the amount you contributed, then select Continue. If none of your contribution can be deducted, you won't see the option to make part of it nondeductible. Instead, the full amount of your contribution will automatically be nondeductible.
12. Select Continue on Your IRA Deduction Summary.

For more information, please see this TurboTax Help Article: How do I enter a backdoor Roth IRA conversion?

[2Double]

Thanks for your answer.

I am confused if I don’t receive the form 8606 this year, how do I report in my 2023 return?

do you mean I have to report both for 2023 and 2024 return if the broker send the form in 2025?

[Bsch4477]

In 2025 you will receive a 1099-R for the distribution which occurred in 2024 to report in 2025 when you prepare your 2024 return. 

[RachelW33 · Accepted solution]

Form 8606 is a form that you need to include with your 2023 tax return by following the steps listed in my previous answer.  It is not a form that is mailed to you by the brokerage.

Next year around this time, the brokerage will mail you a Form 1099-R that you will need to include on your 2024 tax return.

So in summary, you will report your non-deductible traditional IRA contribution on your 2023 tax return following the steps here.  And then next year on your 2024 tax return, you will report the 1099-R that the brokerage will mail to you which reports the conversion from the traditional IRA to the Roth IRA.