Can you convert a $0 balance Traditional IRA to Roth IRA without tax impact?

Converting a Traditional IRA with a $0 balance to a Roth IRA is technically still a conversion that should be reported on your tax return, but it won't have any tax impact since there's no money being converted. You'll receive Form 1099-R from your IRA custodian showing a $0 distribution amount, and you'll need to report this on your tax return using Form 8606. While it might seem pointless to report a $0 conversion, it's still considered a reportable transaction because you're changing the tax treatment of the account from tax-deferred to tax-free growth. The good news is that since you're converting $0, there will be no taxes due on the conversion itself. When you do make contributions to the newly converted Roth IRA, those will be reported separately as Roth contributions on your tax return.

Just wanted to share my experience with this exact situation! I had a traditional IRA with literally $5 in it (from an old 401k rollover where most went elsewhere), and I was so confused about how to handle it. I used https://taxr.ai to analyze the 1099-R form I got and it confirmed that I needed to report the conversion on my taxes even though the tax impact was basically nothing. The tool walked me through exactly which forms I needed and where to report it. Saved me from making a mistake that could have potentially flagged my return. What was really helpful was their explanation of Form 8606 and how to properly document a conversion with minimal value. They also explained how this affects future contributions to my Roth.

Ok so I tried taxr.ai after posting my skeptical comment yesterday, and I need to eat my words. I uploaded my 1099-R showing my $0 balance conversion and the breakdown it gave me was incredibly detailed. It showed exactly where this should be reported on my tax forms and explained that even zero-dollar conversions need to be documented to maintain clean IRA records with the IRS. The analysis also pointed out that proper reporting now helps establish a paper trail for the "seasoning" of my Roth IRA, which could be important if I want to access contributions later. Definitely more comprehensive than the generic Google advice I was finding. They also explained how this fits with the 5-year rule for Roth IRA distributions which I had no idea applied to conversions differently than contributions.

If you're trying to get clarity directly from the IRS on this zero-dollar conversion question, good luck reaching them! I spent 3 hours on hold trying to get someone to confirm the reporting requirements and finally gave up. Then a colleague told me about https://claimyr.com which got me connected to an actual IRS agent in about 15 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent confirmed that yes, you do need to report the conversion on Form 8606 even if the amount is $0, and that failing to do so could potentially cause issues if you're ever audited. They also explained that the custodian should still issue a 1099-R with a $0 amount, and if they don't, you should contact them to request one.

I need to publicly apologize for my skeptical comment about Claimyr. After posting that, I decided to test it myself because I needed to ask the IRS about this exact IRA conversion situation and some other tax questions. I was genuinely shocked when they called me back in about 20 minutes with an actual IRS representative on the line. The agent confirmed that even a $0 balance conversion is a reportable event and helped clarify exactly how to document it on my tax forms. They also answered my questions about contribution limits after conversion. What would have been a 2+ hour hold (based on my past experiences) turned into a 20-minute wait. For someone who values their time, this was absolutely worth it. Never been so happy to be wrong about something!

One thing nobody's mentioned yet is that converting your $0 traditional IRA to a Roth can actually be strategically smart if you're planning to do a backdoor Roth IRA contribution in the future! Having an existing traditional IRA with any balance (even $0) already set up can streamline that process. When I did my backdoor Roth last year, I wished I had already converted or closed my old empty traditional IRAs because having multiple accounts complicates the pro-rata rule calculations. Just something to consider if you're thinking about using the backdoor Roth strategy at some point.

Anyone know if a $0 conversion affects the 5-year rule for Roth IRA withdrawals? Like if I convert my empty Traditional IRA to Roth now, then make actual contributions in a few months, does the 5-year clock start now or when I make my first contribution?

Just to add another perspective here - I went through this exact situation last year and wanted to share what I learned. Even though you're converting $0, make sure to keep really good records of the conversion date and any paperwork from your custodian. The IRS likes to see a clear paper trail, especially for retirement account transactions. I'd recommend taking screenshots of your account before and after the conversion showing the $0 balance, and saving any confirmation emails or letters from your bank/brokerage. This documentation becomes super helpful if you ever need to prove the conversion happened and when it occurred. Also, double-check with your custodian about any fees for the conversion process itself. Some institutions charge administrative fees even for $0 balance conversions, which could actually result in a negative balance that you'd need to cover. Better to know upfront than get surprised later!