1) I contributed $7500 to a Roth IRA in December 2023, then immediately thought "I made a mistake, my W2 will be much lower than that - well, I'll just do an excess removal after I get my W2". What I didn't understand at that point is that since my wife works and makes over $15,000, under the spousal IRA contribution rules my wife and I were both eligible for the full $7500.
2) My W2 turned out to be 2438.64, so at the beginning of March I called Vanguard and had them remove 7500-2438.64=5061.36 + also 245.01 of earnings.
3) I tried to do my taxes with the desktop version of Turbotax, but it absolutely wouldn't let me enter anything into form 5329 (excess IRA contributions). When I traced back the reason why, I found the worksheet that showed that I had no excess IRA contribution due to my wife's income. That made me research spousal IRA contributions on the IRA website.
4) I called Vanguard and told them that I had made a mistake, and asked them to reclassify my withdrawal as a regular distribution. They basically said "no, you told us to go through the excess removal process, so in Jan 2025 we're going to send you a 1099 R for the removed contribution plus earnings with distribution code 8." (That's the timing of when they send a 1099 R for a 2023 excess contribution removal.) This, of course, will not match how I'm going to have to do my 2023 taxes, which will not be reporting a excess removal.
So I don't *think* I have anything special to do for my 2023 taxes because I don't thing I can do anything special for my 2023 taxes. But I want to make a plan now for next year so that I feel confident enough to recontribute the $5061 to my Roth IRA before April 17th. So far my thoughts are to either fill out a form 4852 (completely replaced and corrected 1099 R) or just change the distribution code from 8 to 7 in the Vanguard 1099-R I file. Of course, the IRS would see that Vanguard says that it's 8 and I say that it's 7, which could cause problems.
Any thoughts?
Thanks,
Justin
