As long as you filed your tax return or requested a filing extension by April 18, 2023, you have until October 16, 2023 to perform a recharacterization of the Roth IRA contribution to a traditional IRA contribution or to obtain a return of contribution before the due date (including extensions) of your excess Roth IRA contribution made for 2022.
1. I'm sure that Vanguard has a procedure for performing either of these corrective transactions. If you do a recharacterization, it's treated as if the original Roth IRA contribution had at that time been made to a traditional IRA instead. If you obtain a return of contribution, it's treated as if the contribution had not been made except that any investment gains required to accompany the contribution being returned will be taxable. Either way Vanguard should calculate the amount of attributable gains to be transferred or distributed, depending on which corrective action you take. Vanguard will issue a 2023 Form 1099-R near the end of January 2024 to report the transfer or distribution. If you receive a return of contribution, make sure that no taxes are withheld. Tax withholding on such a distribution is an unnecessary complication.
2. If you recharacterize, you certainly need to amend your 2022 tax return to either include the resulting traditional IRA contribution as a deduction, if permissible, or as a nondeductible contribution. If you obtain a return of contribution and the distributions includes attributable gains, the gains will be taxable on the tax return of the year in which the contribution was made. If you file an amended 2022 tax return, it needs to include the statement, "Filed pursuant to section 301.9100-2."
3. When amending in TurboTax, enter the Roth IRA contribution as originally made, then indicate that you either switched the contribution to be a traditional IRA contribution instead or you "withdrew" the excess. If attributable gains are distributed and the contribution was made in 2022, you'll also need to enter the code JP 2023 Form 1099-R (as if you have already received it if you file the amendment before receiving the Form 1099-R) so that TurboTax will add the taxable gains to your 2022 income. You'll also need to claim an other-reason exception to the early-distribution penalty because the SECURE 2.0 Act eliminated the penalty under these circumstances regardless of your age.
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