How do I fix this Roth conversion issue?

[disneysteve]

I just recently did a Roth conversion at Schwab. Once that settled, I then transferred the new Roth over to Vanguard to merge with my existing Roth. All of that has been completed.

After that was all done, I checked my Schwab account and the old traditional IRA now had a small balance from interest paid on 6/30. I put in a withdrawal request and figured I would just treat it as an IRA distribution. But now I'm hearing that I really should get that money into the Roth so that it is considered part of the conversion.

How do I do that? That interest is being paid out to me directly. If I send it to Vanguard, will there be an option to indicate that it was part of the conversion or will it get treated as part of my 2026 contribution? I can ask VG but not until Monday so figured I'd ask here first.

 

[Kabowest]

If it is the $11.48 from your post on Thursday then I wouldn't spend too much time worrying about it.

 

[TheWizard]

If it is the $11.48 from your post on Thursday then I wouldn't spend too much time worrying about it.

I agree.
And you need earned income for the year in order to do a Roth Contribution...

 

[audreyh1]

I agree.
And you need earned income for the year in order to do a Roth Contribution...

He does earn income from his reselling hobby.

 

[disneysteve]

If it is the $11.48 from your post on Thursday then I wouldn't spend too much time worrying about it.

Yes, it's the $11.48. That's why I wasn't concerned. I'm of age to take distributions. I'm paying tax on the whole amount anyway, what was converted and this excess. Does it really matter if I get those funds into the Roth?

 

[TheWizard]

Yes, it's the $11.48. That's why I wasn't concerned. I'm of age to take distributions. I'm paying tax on the whole amount anyway, what was converted and this excess. Does it really matter if I get those funds into the Roth?

Not at all.
Buy a nice bottle of wine and relax...

 

[disneysteve]

Not at all.
Buy a nice bottle of wine and relax...

I don't drink wine and that's not nearly enough for a bottle of bourbon but I get the point. Thanks.

I assume the paperwork from the IRA distribution will show the full amount withdrawn and I'll just report the actual amount that was converted and then the $11.48 that wasn't.

 

[pb4uski]

Yes, it's the $11.48. That's why I wasn't concerned. I'm of age to take distributions. I'm paying tax on the whole amount anyway, what was converted and this excess. Does it really matter if I get those funds into the Roth?

No, it doesn't really matter. Also, I'm not sure why in the OP you said:

But now I'm hearing that I really should get that money into the Roth so that it is considered part of the conversion.

Especially for a measly $11.48. You'll pay tax but no penalty on it whether you leave it be and it is a taxable IRA withdrawal or convert it. Go spend it on a beer or something.

 

[Winemaker]

Not at all.
Buy a nice bottle of wine and relax...

You're not going to get a NICE bottle of wine for $11.48, just saying.

 

[TheWizard]

You're not going to get a NICE bottle of wine for $11.48, just saying.

Coming from yourself, I totally understand.
But here's one of my staples from Total Wine.
Drop by sometime and I'll pour you a slug...

 

[disneysteve]

You're not going to get a NICE bottle of wine for $11.48, just saying.

Well my "wine" of choice looks more like this and $11.48 definitely isn't getting you a bottle.

 

[TheWizard]

Well my "wine" of choice looks more like this and $11.48 definitely isn't getting you a bottle.

I'm more a fan of high rye content bourbon, but that looks quite decent...

 

[disneysteve]

I'm more a fan of high rye content bourbon, but that looks quite decent...

I like high rye as well. Depends what I’m in the mood for and what, if anything, I’m pairing it with.

 

[RetiredHappy]

Since I don't drink, I will save the whatever amount net of tax on $11.48.

 

[MarieIG]

A bottle of wine vinegar.

 

[old medic]

You're not going to get a NICE bottle of wine for $11.48, just saying.

Boones Farm Baby!

 

[COcheesehead]

You're not going to get a NICE bottle of wine for $11.48, just saying.

Not even a nice glass for that matter

 

[COcheesehead]

Completely off topic, sort of, my wife closed out her 401K when she shut down her incorporated business entity and we had the misfortune of having literally one cent carryover into the next tax year. We had to file paperwork a second time. Fidelity had some specialists help us with all the hassle, but leaving a balance has consequences.