- Mark as New
- Bookmark
- Subscribe
- Subscribe to RSS Feed
- Permalink
- Report Inappropriate Content
Retirement tax questions
As Critter-3 said, it seems unlikely that the IRA custodian would not permit a contribution to a Roth IRA for 2020 to be recharacterized to a traditional IRA contribution instead. Since the contribution was made in March, perhaps the IRA custodian treated it as a contribution for 2019 for which the deadline for recharacterizing has passed. If that's the case and you were not eligible to make that Roth IRA contribution for 2019, you should have reported the excess contribution for 2019 on your 2019 tax return, paid the 6% excess-contribution penalty and to now eliminate the excess you will either need to be able to treat it as some or all of your Roth IRA contribution for 2020 or obtain a regular distribution of the amount of the excess that cannot be applied as part of your 2020 contribution, leaving the gains in the Roth IRA since you will have paid the 6% excess-contribution penalty.
If the IRA custodian treated this as a contribution for 2019, the IRA custodian would have shown this on the 2019 From 5498 that they issued to you in mid-2020. Check with the IRA custodian again to confirm the year for which the contribution was recorded and, if they actually did treat the contribution as being for 2020 as you indicated in your question, find out why they will not recharacterize this contribution as is permitted by law.
Note that if your reason for not being eligible to contribute to a Roth IRA for 2020 is having no compensation to support the contribution rather than having a modified AGI that is too high, you can't recharacterize and you'll need to obtain an explicit return of the contribution made for 2020. As Critter-3 indicated, the IRA custodian will report the return of contribution on Form 1099-R with the taxable gains shown in box 2a that are subject to ordinary income tax and, if you are under age 59½, to a 10% early-distribution penalty.