Hello,
While preparing 2023 returns we discovered that we overcontributed to both our Roth IRAs in 2023.
To make matter worse, we have also contributed for 2024 and expect none of it will be allowed due to higher MAGI this year.
2023 Contribution was $7,500 and 2024 contribution was $8,000
Only $1000 contribution for 2023 is permissible in Roth for both accounts.
We opened traditional IRA accounts and requested recharacterization as follows:
- 2023 tax year - $2,000 (there were losses. In fact account value had dropped below $1,000. Did not realize this before filing for recharacterization)
- 2024 tax year - $8,000
This is already done for wife's account at Schwab.
For my own account the brokerage has delayed and also made some of their own calculation. They transferred only $1,500 to traditional IRA. The Roth account still has $9,500.
The $2,000 recharacterization for 2023 is bothering me now. Because that much money was not left in the account at end of 2023 due to losses. In fact it had fallen below $1,000.
After contribution of 2024 was made, there were some gains and hence total value of the accounts rose to approximately $11,000.
Is this a problem?
We have filed for extension.
Thanks
