Does anyone know if I can convert my 2019 IRA funds via backdoor Roth conversion in 2020? I don’t fully understand the tax guidance, but it seems like I have 60 says to click the convert button.

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To my understanding, in executing the backdoor Roth IRA, there is a contribution and conversion step. It is best to do a backdoor IRA only when you have $0 in traditional IRA assets, as to bypass the annoying pro rata rules.

Assuming we are talking about the 2019 tax year, for contribution, you must contribute to a traditional IRA any time between Jan 2019 and April 2020. Contributions made in 2020 must be specifically flagged/selected as a 2019 contribution.

The next step is conversion from the trad IRA to Roth IRA. This can happen at any time, and to my knowledge, actually has little to do with the tax year in question. However it is to your advantage to make the conversion ASAP, as to minimize your tax impact. This is because any growth on assets you had in your trad IRA would be taxable income upon conversion to Roth IRA.

When making the conversion you will he asked if you want to withhold taxes or not. You don’t want to withhold taxes because the money you are converting is already post-tax in your traditional IRA (since you are over the income limit and you really had just made a non tax deductible contribution in your trad IRA) so there will be no additional tax impact for you.

From a filing taxes and paperwork standpoint, it is easiest to report these maneuvers if your contribution and conversion steps happen in the same calendar year as the tax year but this is not necessary. It would just make the paperwork more intensive if this isn’t the case.

I would read a guide or two on the internet to learn more about this whole thing.

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Thank you!

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