Just Accidentally Contributed to Roth IRA (over income limit). Now what?

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AndroAsc
Posts: 1238
Joined: Sat Nov 21, 2009 7:39 am

Just Accidentally Contributed to Roth IRA (over income limit). Now what?

Post by AndroAsc » Tue Jan 14, 2020 7:59 pm

Crap... I was going to do a backdoor Roth IRA, but I accidentally contributed new money to my Roth IRA. Additional complication is this contribution is for CY 2019, and yes my AGI for CY 2019 is over the income limit.

How do I fix this? Do I just withdraw what I put in?

retiredjg
Posts: 39038
Joined: Thu Jan 10, 2008 12:56 pm

Re: Just Accidentally Contributed to Roth (over income limit). Now what?

Post by retiredjg » Tue Jan 14, 2020 8:08 pm

Do not withdraw it.

Call your custodian and have them re-characterize the contribution to tIRA. It will be like you put it in tIRA from the get go. Then do your conversion as planned.

The re-characterization must be noted on your taxes. Not sure where. Might be schedule 1?

Topic Author
AndroAsc
Posts: 1238
Joined: Sat Nov 21, 2009 7:39 am

Re: Just Accidentally Contributed to Roth (over income limit). Now what?

Post by AndroAsc » Tue Jan 14, 2020 8:14 pm

retiredjg wrote:
Tue Jan 14, 2020 8:08 pm
Do not withdraw it.

Call your custodian and have them re-characterize the contribution to tIRA. It will be like you put it in tIRA from the get go. Then do your conversion as planned.

The re-characterization must be noted on your taxes. Not sure where. Might be schedule 1?
So it would go as:
Initial Roth IRA contribution -> Recharacterized to Trad IRA -> Convert to Roth IRA? I thought recharacterization is now irreversible from 2019 forward?

Is this allowed?

retiredjg
Posts: 39038
Joined: Thu Jan 10, 2008 12:56 pm

Re: Just Accidentally Contributed to Roth IRA (over income limit). Now what?

Post by retiredjg » Tue Jan 14, 2020 8:25 pm

Re-characterization did not go away. You can still re-characterize from Roth to Traditional or vice versa.

What went away is being able to "un-do" a conversion. If you convert traditional to Roth, that cannot be changed.

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