mavsfan4ever said:
I have a couple of questions as well.
My wife and I both have set up a traditional IRA last year and made max contributions that were non-deductible with the intent of rolling them over to a Roth IRA this year. I read an article that said that you should keep the funds in your traditional IRA for close to a year so that it doesn't look like you are just contributing to the Traditional in order to immediately roll it over to the Roth. From reading this thread, it sounds like that isn't something to worry about and you should just immediately roll it over once the deposit hits the account?
So we both made non-deductible contributions to our Traditional IRAs on 12/31/18. We then have invested those funds and have some gains. When we do the roll over to the Roth IRA, I know that are gains will be taxed. But all we have to do is set up a Roth IRA for both of us, and then roll over the entire amount in our Traditional IRAs to our Roth IRAs by completing the Roth Conversion Form, correct?
Could we go ahead and make our 2019 non-deductible contributions to our Traditional IRAs and then roll over the entire amounts in our accounts in 2020? Or should we go ahead and do the roll over this year before making our 2019 non-deductible contributions to our Traditional IRAs?
Sorry for all the questions, but I haven't been able to find a ton online that answers them.
There is a line of thinking that supports this idea as it is theorized to help combat any implication of the step transaction doctrine by the IRS. I think it is hogwash, but many on here will tell you that it is so smart to do that. It's not, the IRS knows exactly what the goal is and separating the contributions from the conversions really does nothing. I do my conversions as soon as it hits the IRA. [Cue all of the smart people telling me how dumb and unsophisticated I am.]
