Pro rata rule for Roth IRA conversion, please help, Thanks!

[szec444]

I made an After Tax Traditional IRA contribution of $6500 for 2023 and invested it. However, I gained interest, so the Traditional IRA totaled to $6501 before I was able to convert $6500 to Roth IRA. Now I have $1 left in my After Tax Traditional IRA. Does the Pro rata rule for for Roth conversion rule now apply? How do I deal with the $1 left in my Traditional IRA on the Form 8606 for Tax Year 2023? Can I still roll the $1 to my Roth to bypass the Pro rata rule? But it’ll be over $6500 for Roth IRA conversion. What should I do? Thanks!

[Opus 17]

This all happened in 2023, correct?  I believe that if you convert the remaining $1 now, that will take care of it, since it all gets reported together on your 2023 tax return.  (This also assumes that the $6501 was your only funds in any traditional pre-tax IRA.  If you have other traditional IRA funds, even with a different broker, we need more details.)  And in the future, try specifying that you want to convert "100%" rather than a specific dollar amount.  

[dmertz · Accepted solution]

Presumably you have no other funds in traditional IRAs since the pro rata rule treats all of your traditional IRAs in aggregate as if they are a single large traditional IRA.  Because of this there is really no such thing as an "after-tax traditional IRA," only after-tax, nondeductible contributions to your traditional IRAs.

No matter what you do, Form 8606 Parts I and II are required to be included with your 2023 tax return.  If you have $1 left in traditional IRAs at the end of 2023, $6,499 of your $6,500 Roth conversion will be nontaxable and $1 will be taxable.  If you do noting more, $1 of basis will remain in your traditional IRA.

Opus 17 is correct.  Since you presently have $1 in traditional IRAs and $1 in basis, the simplest thing to do would be to convert this remaining $1 before the end of 2023.  Doing so won't change your taxable income.  You would still receive a single Form 1099-R and it would report the total of $6,501 converted.