douglas_c
Returning Member

Retirement tax questions

Thank you so much for the reply. The information that you have given me will be helpful in getting the re-characterization followed by backdoor conversion filed correctly. I still have my primary question and reading my initial post I see that I didn't make clear the main source of my confusion. My primary issue is that I have a $0 limit for 2022 traditional IRA contributions and the entire initial $7K contribution (originally to Roth-IRA and re-characterized to a traditional IRA) was an excess contribution. I'm glad to here that there wasn't an excess contribution as a result of the re-characterization, but I need to undo the entire $7000 (or $6907) contribution.

 

The steps I detailed show what I've done (and all the mistakes I've made) so far, but now I'm in the situation of *still* having an ~$7K excess contribution to my traditional IRA (due to the re-characterized Roth contribution) and only being able to withdraw money from the Roth. I need to figure out a way to cancel out the excess contribution or face a 6% penalty every year that this remains unresolved. Given that context, my original three questions are still perplexing me:

 

1) Is the financial institution really limited to doing a "normal" distribution, and if so is there a way to fill out my taxes so that the "normal" Roth distribution cancels out what is actually an excess contribution to my traditional IRA.

 

2) Should I have the original $7000 converted contribution removed, or the contribution plus earnings? What about if there's actually been a loss attributed to the conversion (this is the case)?

 

3) How does this (large) mess get filed in TurboTax?  I'm particularly concerned about the method to show the excess 2022 traditional IRA contribution being cancelled with a 2023 1099-R for a normal distribution from a Roth IRA.