Doing my first backdoor Roth IRA conversion but I received a $100 bonus for opening the Traditional IRA from Fidelity after contributing $50. It's been in a money market for some time and now it's $151.66 ($50 contribution + $100 Fidelity contribution bonus + $1.66 growth). 

Should I contribute an additional $5848.34 to the Traditional IRA to make total $6000 or should I contribute $5950 and have a total of $6101.66 to convert? Basically just want whatever is easiest to fill out taxes. 

I did call Fidelity and they told me I don't have to pay taxes on the $100 from Fidelity, that it counts as a contribution, and that I CAN still contribute $5950 to the account but they can't advise me what is best for the Backdoor Roth IRA conversion. This confused me because if the $100 is a contribution then shouldn't I contribute an additional $5850? I know I'll still have to pay taxes on the $1.66 growth following this guide: https://www.whitecoatinvestor.com/pennies-and-the-backdoor-roth-ira/
The annual contribution limit to an IRA (Traditional or Roth) is $6,000 for 2021 if you're under 50 years old. This limit includes all contributions made to your IRA, including any bonuses you receive from the financial institution.

In your case, if Fidelity is treating the $100 bonus as a contribution, then that amount would count toward your annual contribution limit. So, you would only be able to contribute an additional $5,900 ($6,000 limit - $100 bonus) to your Traditional IRA for the year.

When you perform a backdoor Roth IRA conversion, you'll indeed have to pay taxes on any earnings in your Traditional IRA before the conversion. In your case, this would be the $1.66 growth.

However, when it comes to the bonus, if Fidelity says it counts as a contribution and is post-tax, then you shouldn't have to pay taxes on that amount during the conversion. 

In terms of simplicity for tax filing, contributing an additional $5,900 and then converting the total amount of $6,001.66 ($50 initial contribution + $100 bonus + $1.66 growth + $5,850 additional contribution) to a Roth IRA would be the cleanest approach. 

Remember to file Form 8606 with your tax return to document the non-deductible Traditional IRA contribution and the subsequent conversion to a Roth IRA. This will ensure you don't pay taxes on the conversion of your post-tax contributions.

As always, it would be prudent to consult with a tax advisor or CPA to ensure you are following all rules and regulations correctly.
### Human
Doing my first backdoor Roth IRA conversion but I received a $100 bonus for opening the Traditional IRA from Fidelity after contributing $50. It's been in a money market for some time and now it's $151.66 ($50 contribution + $100 Fidelity contribution bonus + $1.66 growth). 

Should I contribute an additional $5848.34 to the Traditional IRA to make total $6000 or should I contribute $5950 and have a total of $6101.66 to convert? Basically just want whatever is easiest to fill out taxes. 

I did call Fidelity and they told me I don't have to pay taxes on the $100 from Fidelity, that it counts as a contribution, and that I CAN still contribute $5950 to the account but they can't advise me what is best for the Backdoor Roth IRA conversion. This confused me because if the $100 is a contribution then shouldn't I contribute an additional $5850? I know I'll still have to pay taxes on the $1.66 growth following this guide: https://www.whitecoatinvestor.com/pennies-and-the-backdoor-roth-ira/

### Assistant
The annual contribution limit to an IRA (Traditional or Roth) is $6,000 for 2021 if you're under 50 years old. This limit includes all contributions made to your IRA, including any bonuses you receive from the financial institution.

In your case, if Fidelity is treating the $100 bonus as a contribution, then that amount would count toward your annual contribution limit. So, you would only be able to contribute an additional $5,900 ($6,000 limit - $100 bonus) to your Traditional IRA for the year.

When you perform a backdoor Roth IRA conversion, you'll indeed have to pay taxes on any earnings in your Traditional IRA before the conversion. In your case, this would be the $1.66 growth.

However, when it comes to the bonus, if Fidelity says it counts as a contribution and is post-tax, then you shouldn't have to pay taxes on that amount during the conversion. 

In terms of simplicity for tax filing, contributing an additional $5,900 and then converting the total amount of $6,001.66 ($50 initial contribution + $100 bonus + $1.66 growth + $5,850 additional contribution) to a Roth IRA would be the cleanest approach. 

Remember to file Form 8606 with your tax return to document the non-deductible Traditional IRA contribution and the subsequent conversion to a Roth IRA. This will ensure you don't pay taxes on the conversion of your post-tax contributions.

As always, it would be prudent to consult with a tax advisor or CPA to ensure you are following all rules and regulations correctly.<eos_token>