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Author: TMFBigFrog Big red star, 1000 posts Old School Fool Home Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 124941  
Subject: Silly Pennies Date: 5/3/2011 1:36 AM
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Prior to 2011, neither my wife nor I had any Traditional IRA accounts. In early 2011, for tax year 2011, we each contributed to non-deductible Traditional IRAs and immediately simultaneously requested the accounts be rolled over/converted into our long-held, previously existing Roth IRAs. Our objective was what is often known as the "Backdoor Roth" strategy.

Due to a backup at our brokerage's central office, it took a couple of days for the roll overs to process. While the total amounts in the accounts at the time of the roll over/conversion was rolled over, the cash balances that had sat in the traditional IRAs for a few days earned $0.01 in interest, credited to the traditional IRA accounts at the end of the month of the conversion.

As a result, my wife and I each have $0.01 in our traditional IRA accounts based on the interest earned from the 2011 contribution.

The question(s): Does it make a hill of beans worth of difference if we wait until we make our 2012 contributions to roll over those pennies? Or is there some tax provision or paperwork simplification I'm not thinking of that makes it a better idea to roll 'em in 2011, in the same year as the original contributions? If it matters, we're both in our 30s.

Inside Value Home Fool

PS: I intentionally waited until after tax season to ask this, because it really seemed like way too small potatoes to bother folks with while deadlines were approaching...
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