The question asks: Enter your total Roth IRA contributions for 2020, even if you transferred, or 'recharacterized,' some or all of it to a traditional IRA.
Clarification needed: does this apply only to 'recharacterized' contributions or should it include conversions as well (such as a backdoor traditional IRA to Roth)? I.E. would I enter $600 or $6000 given the details below?
My situation:
- I contributed $600 into a Fidelity Roth IRA in 2020. That money is untouched and remains there.
- I contributed $5400 (the basis) into a Wealthfront Traditional IRA, which grew to $6100. In December 2020 I converted the entire account ($6100) to a Wealthfront Roth IRA (origination date is Dec 2020). The traditional IRA account is now closed.
- I received a 2020 1099-R from Wealthfront, as expected, with Boxes 1 and 2a showing the $6100. Box 7 has code 2. IRA/SEMP/SIMPLE box is CHECKED. No other boxes are filled.
So in total I contributed exactly $6,000 to all my IRAs in 2020, but only $600 was direct, and $5400 was converted. So which number do I put on that screen? I believe it should be just the $600 otherwise it tells me that I exceeded the allowable contribution (due to MAGI being too high) which is exactly what I was trying to avoid with the backdoor conversion.
(Side note: my 1040 preview shows me being taxed on the $700 growth of the traditional prior to the conversion, as I would expect)
