Assume in 2014 that you made too much money to contribute to a Roth IRA but you had made automatic contributions to the Roth IRA account throughout the tax year. At the end of the year, you recharacterize your Roth contributions to a Traditional IRA and do not take a deduction for the Traditional IRA. Question 1: Is this recharacterized money taxable (since it was initially funded with after-tax money into the Roth IRA)?
In 2020, you convert this Traditional IRA to a Roth IRA. Question 2: Is the tax burden (the taxable amount) the amount of money the IRA has increased from the time it was recharacterized to the time it was converted? I received a 1099-R indicating the entire amount (from the time it was recharacterized to the time it was converted) is fully taxable. Please provide advice. Thank you.
PLMcG
