Wait wait wait wait wait just a minute. Let me get this straight:
1. You contributed $7000 to a Roth IRA in 2024, or in 2025 for the 2024 tax year.
2. You contributed $1000 to a traditional IRA in April 2025 that was credited to tax year 2024. Then, you converted the $1000 to the Roth IRA.
We've all missed the point. Contact the Roth IRA and withdraw $1000 as an excess contribution, with the net attributable income, and report that on an amended 2024 tax return. No penalty.
The fact is, you contributed $8000 to your combined IRAs when your limit was $7000. You can assign the $1000 excess anywhere you want. You can't remove the excess from the trad IRA because it was already converted, but if you contributed directly to the Roth IRA, you can the $1000 excess is part of the Roth contribution, and remove the excess from that account, using the special procedure for removal of excess contributions. The net attributed income is taxable, but there is no penalty for early withdrawal and no penalty for excess contributions.
In this case, you file an amended 2024 return. Go to the section for retirement income and enter a substitute 1099-R for the removal of excess. Box 1 is the total amount of the withdrawal, box 2a is the amount of taxable attributed income, and use codes P and J in box 7. You will not need a form 5329 at all. Include “Filed pursuant to section 301.9100-2” as part of your explanation for the amended return.
Then you do not need to make a $1000 withdrawal during 2025.
(If the entire $8000 for tax year 2024 was involved in conversions, this won't work, but if some of the money was a direct Roth contribution, you can remove the excess from there instead of the trad IRA.)
