dmertz
Level 15

Retirement tax questions

In my previous reply I should have said that a return of your traditional IRA contribution or recharacterization of your traditional IRA contribution to be a Roth IRA contribution instead has nothing to do with a backdoor Roth.  Recharacterization simply makes it as if the original contribution had been made to a Roth IRA, meaning that you must be eligible to have made the Roth IRA contribution based on your filing status and modified AGI for the purpose of a Roth IRA contribution.

 

You didn't say why you were considering a recharacterization.  

 

If you were ineligible to contribute to a Roth IRA because your MAGI is too high, you can get money into a Roth IRA by doing a Roth conversion from your traditional IRA.  The original traditional IRA contribution, would remain a traditional IRA contribution and the Roth conversion would be a separate transaction.  The taxable amount of the Roth conversion would be calculated on Form 8606.

 

If you are eligible to have made a Roth IRA contribution for 2020, it would be more beneficial to do a recharacterization than to do either a Roth conversion or a return of contribution.