dmertz
Level 15

Retirement tax questions

Many errors were made.

 

08/11/2022:  A return of contribution was a possibility despite the delay, if that was your desire (but a recharacterization was done instead).

 

11/09/2022:  There was no excess contribution.  The gain-adjusted transfer of $7,093 changed your $7,000 Roth IRA contribution into a $7,000 traditional IRA contribution.  The request of a return of $93 of your $7,000 traditional IRA contribution reduced your traditional IRA contribution to $6,907.  (It seems the IRA custodian should have calculated a $1 investment gain on the $93 and distributed $94 with $1 being taxable, but that's not worth worrying about.)

 

The way to get this reported properly on your tax return is not obvious.  Enter the $7,000 Roth IRA contribution, indicate that you recharacterized ("switched") $6,907 to be a traditional IRA contribution instead, then when TurboTax indicates that you have $93 excess Roth IRA contribution, indicate that you had $93 returned.  Although this is not the same as what you actually did, it results in correct reporting on your tax return.  You'll explain the recharacterization and return of contribution as I have described them (not as you described them) in the required explanation statements.  Form 8606 line 1 will show the $6,907 nondeductible traditional IRA contribution (assuming that it is indeed nondeductible).