I once read on Blind about the importance of properly documenting every mega backdoor conversion I make. By this, I mean conversions of after-tax 401K contributions to a personal Roth IRA. I just completed one such conversion yesterday and was wondering what pieces of information I needed to document. Specifically, 1. Are there conversion information that Fidelity won't be sending to me during tax season? 2. If so, what exactly should I be documenting and why? TC: 225K #personalfinance #investments #megabackdoor
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You can google all of this but your brokerage should send you a 1099-R after the taxable year concludes. That will contain how much $$ was distributed, your $$ contributions and what portion of that $$ if any is taxable. It also contains a box with a code in it to indicate the fact that you rolled over these funds. You basically plug this info into your tax software or give to your CPA. You only get taxed on the amount of distributions > contributions, so try to rollover frequently to maximize the tax shelter of the Roth IRA
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