Bogleheads.org

All,
I am a newbie and need some advise/help from the experts here. I apologize in advance if the issue that i am facing has been covered earlier. If so, would appreciate if a kind soul could forward me a link. (I have applied for extension for filing taxes) I have read a lot about the back- door Roth conversions and in my case, i have a rather different issue.

1. Deposited $5000 into traditional IRA (had told the broker Scott trade that this was a non-deductible IRA)
2. converted traditional IRA to Roth IRA
3. It appears that only $3500 got converted to Roth and remaining $1500 was withheld as taxes (this should not have happened and i believe that this was a mistake on part of the broker.. but anyways they did so).
4. So what i have is 2 1099-R's from the broker shown below for the IRA

1099-R (first form) details (non-blank fields only) shown below:
1. gross distribution $1500
2a. Taxable amount $1500
2b. Taxable amount not determined (x)
Total Distributions (x)
4. federal Income tax withheld $1500
7. distribution code(s) 1
IRA/SEP/SIMPLE (X)


1099-R (second form) details (non-blank fields only) shown below:
1. gross distribution $3500
2a. Taxable amount $3500
2b. Taxable amount not determined (x)
Total Distributions (x)
4. federal Income tax withheld $1500
7. distribution code(s) 2
IRA/SEP/SIMPLE (X)

Pl. note that my IRA was non-deductible... and i talked to Scott Trade and they said.. they cannot help me out and I want to know what to fill in my form 8606. I have turbo tax but i dont think turbo tax will be able to handle this elegantly. At this point in time, i am ok to recover my $1500 tax and be happy with converting only $3500 to Roth.

Can any kind sould help me with this potentially complicated issue.

regards
J

Did you fill out a form that you mailed or faxed? If so, there should have been an option to withhold taxes or not. If you did such a form, call the custodian back and ask that the rep find it and review it with you. If it was done online or over the phone, there's probably no help there.

You could just recharacterize it. That undoes the entire thing and you can try again next year.

I'm uncertain as to whether there's any other way to fix it. You could try calling the IRS help line and see what they say.

You didn't say when you did this. I'm assuming this year. If so, then the conversion has no effect on your 2012 taxes other than the 8606 to record the non-deductible contribution. You don't need to hold up your tax return any further. If you did the conversion last year, then you would need hold off.

BTW, there's no such thing as a non-deductible IRA. There's point telling the custodian that. There are only deductible or non-deductible contributions. That's between you and the IRS.


Brian