Hi Mark and Matt! On 1/1/24 I rolled $5,000 of my $11,000 rollover IRA into a Roth. This is money that has been there for years, some after tax and some pretax from previous employer. I do not need to worry about this on my taxes for this yr, correct? I can pay it next yr?
Per the pro rata rule my understanding is if I were to add money for 2023 (or any year) for the purpose of rolling it into Roth on day 2, I would have to pay a portion of tax on this money even though it’s all after tax money and I’m rolling out the exact amount I put in, bc of pro rata? So I’d have to proportionally split “it” between my after-tax and pre-tax balances, including contributions and earnings.
If this is the case, it seems to me I would want to keep the smallest balance possible in my traditional or rollover IRA and have it only for the purpose of rolling money into my Roth. Am I understanding this correctly? Thanks! Lauren