In 2020, I mistakenly did a backdoor Roth twice, $6000 each time. So I have a total of $12000 (nondeductible) contributions to my Traditional IRA and $12000 conversions to Roth. I received two 1099-Rs, each showing a $6000 conversion from the Traditional IRA to the Roth.
I have contacted my broker and they will withdraw $6000 (plus any earnings) excess from my Roth before the April filing deadline. My understanding is that they cannot reverse the conversion and return the money to the Traditional IRA first, so I think they'll send cash to my bank directly from my Roth IRA.
• Because I will withdraw the $6000 excess before the filing deadline, it seems that I do not necessarily need to file a form 5329.
• But, because I need to record both 1099-Rs, I get a form 8606 with $12000 of distributions and only $6000 of contributions (line 17 of 8606).
It seems like I have a few options:
1) Report an excess Traditional IRA contribution on a 5329 line 16, but a $0 on line 17 (zero balance so $0 penalty). For 8606, I would report $12000 for line 16 (amount converted) and $12000 for line 17 (the basis of the amount for line 16), making the taxable amount $0. In 2022, I'll receive a 1099-R for the withdrawn excess including taxable earnings. (Not sure exactly how I'll report that next April.)
2) Report no excess contribution, because it was withdrawn before filing deadline, so no form 5329. I'll report $12000 on line 16 of the 8606 and $6000 on line 17, resulting in $6000 taxable distribution on line 4b of the 1040. I would have to pay ordinary income tax on $6000, but then somehow in when filing taxes for 2022 get those taxes back?
3) Report only $6000 on 8606 line 16 and $6000 for line 17. This seems risky, because I did receive two 1099-Rs for $6000 each, so it seems like that will trigger something for the IRS.
[edit] 4) Somewhere between 1 & 2. Report $12000 on line 16 and 17 of the 8606, resulting in zero taxable distribution of line 4b of 1040. Do not submit a form 5239 because the excess contributions were withdrawn before the filing deadline. (This assumes no gains.) Nevermind
Thoughts?
