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Recharacterization of Roth IRA to Traditional IRA then backdoor Roth IRA...1099-Rs indicate I'm getting taxed the full amount?
Timeline:
- In 2022, I mistakenly contributed $2236 to my Roth IRA not realizing my MAGI exceeded the annual limit.
- In 2023, I recharacterized the full $2236 amount as a Traditional IRA ($2223 actually got transferred), and then converted $2246 back to a Roth IRA. At the time of conversion, I had no pretax TIRA balance.
- Keeping in mind the Pro Rata rule for the Backdoor conversion, as of 12/31/2023 I had a $0.00 in my Traditional IRA.
- My 2022 form 8606 reported that I have a basis in Traditional IRA of $2,236.
This year, I received 2 1099-R's for the 2023 Tax Year:
- The first 1099-R reported the recharacterizing of the the Roth IRA to Traditional (with status code R)
- The second 1099-R reported the backdoor conversion from Traditional IRA to Roth IRA
Questions:
- Both 1099-Rs show taxable amounts (box 2a) of $2,223 and $2,246, respectively. This doesn't seem correct. Shouldn't I just be taxed on the ~$10 earnings of gains that occurred by leaving the recharacterized money in the traditional IRA before converting back to Roth?
‎February 8, 2024
9:36 AM