Back door Roth fail?

[mkwirsch]

An early Happy New Year to you all!

Quick question regarding my attempted back door Roth.  I made the mistake of waiting until far to late in the year and funded a new IRA on 12/27.  Due to some bad info from TD Ameritrade and the timeframe for an ACH money transfer my funds will not be available to convert to Roth until tomorrow, Jan 1.  Is there any issue with simply doing the Roth conversion tomorrow for 2021?  I realize I am at risk of BBB legislation but that is looking less likely as of late.

Sharing the following info in case it will help others in the future.  ACH money transfer from my Bank of America account to TD amertitrade normally takes 5 business days.  Once the $ clears from my bank, TD Ameritrade holds the funds up for an additional business day which is what is causing my current problem.  I should have wired the funds which would have cleared all parties in 1-2 hours. 

[MDM]

Conversions are taxable events for the tax year equal to the calendar year in which they occur.

Because the conversion won't happen in tax year 2021, your tax forms (8606, 1040, etc.) for TY2021 won't include the conversion.  Your Forms 8606, 1040, etc., for TY2022 will include the conversion if you do it in 2022, assuming no change in the current law....

[terran]

No a problem, just that the conversion reporting will happen when you file 2022 taxes as MDM explained. As a bonus you could also contribute for 2022 and then convert the whole amount together.

[mkwirsch]

Thanks for the info.  This is what I figured but needed the confirmation.

[Parentheses]

No a problem, just that the conversion reporting will happen when you file 2022 taxes as MDM explained. As a bonus you could also contribute for 2022 and then convert the whole amount together.

I did the same thing as the OP, and I’m also horribly incompetent with taxes.  I deposited $6000 before the new year to the traditional IRA. You’re saying I could deposit an additional $6000 as the 2022 amount now, then convert the entire $12000 at one time in the Roth conversion?

[MDM]

I did the same thing as the OP, and I’m also horribly incompetent with taxes.  I deposited $6000 before the new year to the traditional IRA. You’re saying I could deposit an additional $6000 as the 2022 amount now, then convert the entire $12000 at one time in the Roth conversion?

Yes, under current law.  Whether Congress will eliminate the ability to use the backdoor process in 2022 is anyone's guess.

It might be helpful for you to fill out two draft versions of Form 8606, one for how you expect it will look when you file it for tax year 2021, and the other for how you expect it will look when you file it for tax year 2022.