@Jdcasares129 wrote:
1. Can I convert my recharacterized contributions (ones originally made in 2019 as Roth and recharacterized to Traditional) back to a Roth IRA?
2. My understanding is that because my Traditional IRA contributions are non-deductible, I only pay taxes on earnings when I convert. Can I contribute money to my Traditional IRA account, convert it to my Roth IRA account, and then purchase shares? Or do I have to purchase shares first and convert those? I want to avoid accidentally making a direct Roth contribution.
3. Do I pay taxes on any converted earnings on my yearly tax return or sooner?
#1) Yes.
#2) Just convert the money to a Roth.
#3) You pay tax on the earnings (or conversion if taxable) when you file your tax return for the year converted. You will receive a 1099-R to report it.
Keep in mind that the non-deductible contributions will ONLY offset the conversion if on Dec. 31 or the year converted, the combined value of ALL existing Traditional, SEP and SIMPLE IRA accounts that exist is zero, otherwise the non-deductible amount must be prorated between the conversion and remaining value.
If you have other IRA's such as a rollover 401(k) then this will not work and much or most will be taxable.
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
