Thanks @dmertz. I called my brokerage firm to check my option on how we can correct this mistake, and here is what I learnt from them
1) I had no contribution to my Roth IRA in 2022 except for the $1500 contribution that I made - say on 03/01/2022
2) Then I took a regular distribution of $1500 on 03/15.
3) So now, there is no way for the brokerage account to correct it - either re-characterization to traditional or a corrective distribution. Because the money doesn't exist.
So, the safest option it seems is to - Contribute $4500 to Traditional in 2022. This way I am still under the max contribution of $6000. ($4500 + $1500)
So now, I contribute less in 2022 (I am okay with it), but I don't get penalized for the Roth contribution as an excess contribution. The distribution from Roth will not have any penalty, because we are talking about after-tax money throughout this thread.
@dmertz Do you see any issues with the above option?
