Backdoor Roth Conversation & Broker's match(Offer) for IRA contribution

[VAer]

I used to do Backdoor Roth Conversation for all IRA contribution (Contribute to Traditional IRA first, then immediately transfer to Roth IRA, almost no gain for traditional IRA, maybe a little interest.

How if I make contribute to traditional IRA, and broker matches 3.5% on IRA contribution (up to $280/year), and I want to transfer all the money to Roth IRA. How does it work with tax filing?

I don't even know when match amount will be released? Soon after contribution or 365 days after premium subscription or 5 years later?

The bottom line is --- I don't want to make tax filing too complicated.

[fanfare]

Bottom line is - you have to ask the broker for clarification of these finer points.

.e.g.

Is converting to a Roth at the same brokerage considered keeping the IRA?

You are locking yourself in for a small reward.

@VAer 

[VAer]

@fanfare I have no idea if Backdoor Roth Conversion is considered keeping IRA.

It is not my intention to get IRA match reward.  My intention of getting premium subscription is to get higher APY for individual brokerage account (uninvested cash).

They just extend premium benefit to IRA accounts (3.5% on IRA contribution). I am worried about making tax filing complicated.

[baldietax]

I was curious so I had a poke around Webull, see here and mind the smallprint

https://www.webull.com/help/faq/11063-Benefits-with-Premium

Are there any tax implications for the IRA Match rewards?

The IRA match reward is treated as interest earned by your IRA account and is not reportable for tax purposes. However, if you take distributions from your IRA, those distributions may be subject to taxes. Please consult a tax professional for details specific to your situation.

so for tax perspective it seems if you get this reward it's just treated like interest and if you then convert the balance to Roth, the reward would be counted just like interest i.e. is part of the MV transferred to Roth but not included in your cost basis, and would be taxable in the conversion.

Usually these type of bank/brokerage offers are looking to keep you locked in for some period of time or hope that you miss some smallprint and don't qualify and don't realize it for a year etc.  If you're already using the platform that's great, if you're thinking of moving assets to them just for this offer I would be wary and research where you're putting your money, and whether it's worth it for $280.

[VAer]

@baldietax I have accounts with webull for some years, mainly for option trading only. I had backdoor roth conversion with webull for some years too.

Best low cost: 

https://www.investopedia.com/the-best-brokers-for-options-trading-8763492

[fanfare]

if broker gives you a premium as a deposit into your IRA, it does not add any complication to your tax return.

The issue is if you don't meet the requirements and they want the money back after it has  gone into your Roth IRA. That is a potential IRS penalty situation.

@VAer 

[Opus 17]

Whatever dollar amount that you convert that is more than your contribution is taxable income when you do the conversion.  It doesn't matter if the increase was from investment gain, bank interest, or this incentive.

Very simple, no extra paperwork.  Report the conversion from the 1099-R per the usual methods.

If you have to hold the money longer to qualify for the match, that's a separate problem.  But the conversion itself is no different than any other conversion where you have some interest or investment gains.