I'm suddenly looking sideways at a Roth conversion -- walking it through here to get clear.
A spouse had a traditional IRA worth about $10,000 end of 2019. In 2020, she contributed $1400 to the traditional IRA, then converted $5000 to create a new Roth IRA. She then contributed an additional $1000 to the Roth.
She's below the contribution limits, so that's okay.
On the 1040, the $5000 traditional distribution will be taxable on line 4b, and the traditional $1400 contribution would be an adjustment on schedule 1 line 19 (flowing to the 1040).
No 10% early withdrawal penalty applies because it was converted.
On the 8606, part II will show $5000 on line 16 and 18.
Am I on track? And what should part 1 of the 8606 look like?
Thanks in advance for straightening me out on this.
A spouse had a traditional IRA worth about $10,000 end of 2019. In 2020, she contributed $1400 to the traditional IRA, then converted $5000 to create a new Roth IRA. She then contributed an additional $1000 to the Roth.
She's below the contribution limits, so that's okay.
On the 1040, the $5000 traditional distribution will be taxable on line 4b, and the traditional $1400 contribution would be an adjustment on schedule 1 line 19 (flowing to the 1040).
No 10% early withdrawal penalty applies because it was converted.
On the 8606, part II will show $5000 on line 16 and 18.
Am I on track? And what should part 1 of the 8606 look like?
Thanks in advance for straightening me out on this.