Roth IRA Recharacterization failed, now what?

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Posts: 3
Joined: Tue Feb 14, 2017 9:00 am

Roth IRA Recharacterization failed, now what?

Post by safespace » Thu Jan 16, 2020 11:26 am

I would appreciate any insight and comments about my situation.

In Feb 2019 my (girlfriend at the time) contributed $6k to her Roth IRA with an annual income of $60k. We then got married in Aug 2019.

My income is >$200k and I have been previously doing a backdoor Roth IRA. Since we got married in August 2019, I assumed that her 2019 Roth IRA contribution made before our marriage is no longer valid due to our high combined income.

I submitted in December a request online with Fidelity to recharacterize her Roth contribution to Traditional with the plan of then doing a backdoor Roth. However, that request was not completed (normally 3 business days). I finally got around to calling them today and Fedelity explained that there was a glitch in their system and even though they had my request it was not processed. The representative said he has never seen this happen before :shock:

Fidelity proposed that I should resubmit the recharacterization request now.

Does this seem like the appropriate next step? Will there be an issue with recharacterizing in 2020 for a 2019 contribution? Can I just leave the money in her Roth IRA and pay some sort of tax penalty?

Thanks for your input

Silk McCue
Posts: 3864
Joined: Thu Feb 25, 2016 7:11 pm

Re: Roth IRA Recharacterization failed, now what?

Post by Silk McCue » Thu Jan 16, 2020 11:28 am

There is a time limit for how long you have to recharacterize a contribution but you can definitely do it now in 2020 for a 2019 contribution. I would follow through rather than deal with the IRS for over contributing to a Roth.

Please find the details below ... terization
When to complete your IRA contribution recharacterization

Your contribution must be recharacterized on or before your tax-filing deadline for the year for which it was made.

The IRS generally provides an extended time frame—until October 15—to complete your recharacterization. (You may be required to file an amended return at that time.)

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