@p3keith wrote:
Thanks, macuser_22.
Just to be clear, I did recharacterize the $5,500 of 2020 non-deductible contributions to a Roth last month. I did not convert that money. What happened was $500 of my non-deductible 2020 contributions was mistakenly converted in March of 2020 when my investment manager gave the order to convert my 2019 non deductible contributions. Again, that was a mistake; the $500 of 2020 money got wrapped up in the conversion. Only my 2019 non deductible was supposed to be converted and the plan was to wait and see if I was under the income limit for 2020 and would then recharacterize those contributions. I was under the limit this year and did the recharacterization of the remaining $5,500.
Unfortunately, that $500 is the problem. It was converted in March of 2020 when the 2019 conversion was done. This 2019 conversion of $6,000 and the mistaken conversion of $500 show up on my 1099-R for 2020. Unfortunately you can't recharacterize converted funds. So I need to show the $500 as a non-deductible contribution on my taxes this year because that was when the conversion happened and is reflected in my 1099-R.
I am trying to understand this.
If you made a $5,500 2020 Traditional IRA non-deductible Traditional IRA contribution and had the IRA custodian move (characterize) that to a Roth then that money is in the Roth and not the Traditional IRA.
Then $6,000 of other Traditional IRA money was converted to the Roth. $5,500 was 2019 contributions.
Where did the additional $500 come from if it was already in the Roth if you had already recharactorized it to the Roth - it would not be in the Traditional IRA at all?
**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.**
