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Hoots : If I auto deposit every week into a Traditional IRA, can I keep doing a backdoor conversion to a Roth IRA every week? If I auto deposit every week into a Traditional IRA, can I keep doing a backdoor conversion to a Roth IRA - freshhoot.com

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If I auto deposit every week into a Traditional IRA, can I keep doing a backdoor conversion to a Roth IRA every week?
If I auto deposit every week into a Traditional IRA, can I keep doing a backdoor conversion to a Roth IRA every week? How does that affect my taxes? Do I get taxed on the earnings each weekly deposit earns right before I do the Roth conversion every week or do I get taxed on the earnings from the conversion basis inside my Roth IRA account at the end of the year...

I'm just really confused whether or not to just keep contributing all year to a Tradidional IRA then convert it to a roth at the end of the year or if I should keep converting every week as the auto deposit goes through


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If you are contributing weekly to your Traditional IRA via auto-deposit, each contribution would be 00/52 which is a little over 0, right? Or are you contributing more, completely forgetting that the total IRA contribution for 2015 is 00? (OK, OK, I know that people aged 50 or more can contribute 00, but let's keep is simple for now, all right?) If you have violated the limit for 2015, you still have time to put things right before April 18, 2016. This means withdrawing the excess contributions and all earnings therefrom by April 18. If you fail to do
so, you will be charged a 6% penalty per year as long as the excess contributions plus earnings remain in your Traditional IRA account.

More likely, the sum total of your weekly deposits does not exceed the the limit. But, if your contributions made during 2015 total the limit,
do check that the weekly deposits made during 2016 are being correctly recorded as 2016 contributions and not as 2015 contributions.

Finally, turning to your question about weekly conversions from
Traditional IRA to Roth IRA, it is true that the IRS does not limit the number of such conversions per year, but your IRA custodian may want to
charge fees for (i) converting too many times (they have to do paperwork each time) or (ii) low balance in the mutual-fund/bank/brokerage account that your Traditional IRA is invested in. My recommendation is to do the conversion once a year rather than weekly, but YMMV.


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