Please consider the following scenario for a Traditional IRA to Roth IRA conversion using Betterment.

  1. A Traditional IRA account was created & funded with $6000.
  2. After a week, the account balance was $6012.
  3. A backdoor Roth IRA conversion was initiated.
  4. At the time of conversion, the balance was $6020.

Which of the following apply?

  1. Is account balance of $6020 considered as the contribution to Roth IRA or the contribution of original $6000 considered?
  2. Do we need to withdraw $20 so that the limit of $6000 (for Roth IRA) is satisfied?

1 Answer 1


I do that every year. There is no limit on the amount you convert; the only consequence is the taxability - you will have to pay taxes for the gains you converted. At the end of the year, the provider will send you the details that you need to include in your tax filing.

Note that this is independant of the tax status of the original 6000 - if they were pre-tax (most people), they are taxable when converted, together with the $20 gains; if they were post-tax (because you were over the pre-tax contribution income limits), they are tax-free in the conversion - but not the extra $20 gains.

It becomes more interesting if you have instead a loss before the conversion goes through, but logically it stays the same, you might just save some taxes. Not that it is something to hope for - a loss is a loss, even if you save the taxes on it.

  • 2
    And to explicitly answer OP's questions: 1) No. It is not any sort of Roth IRA contribution. Not a $6000 one and not a $6020 one. 2) No that's not necessary, conversions are not contributions and the Roth IRA contribution limit does not apply. (Which is the whole point, since most people using the backdoor Roth method have reduced or zero Roth IRA contribution limits)
    – Ben Voigt
    Dec 27, 2019 at 22:59
  • 1
    And we need to be clear, if there were other IRA assets, the conversion needs to be prorated for purposes of pretax/post tax money and tax due. Dec 30, 2019 at 13:54

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