I accidently made too much last year and am not eligible to contribute directly to a Roth IRA for 2024. I maxed out my contributions for the year beforehand so now I need to recharacterize the $7000 that I put in. I requested all the securities purchased with the contribution and the remaining cash be recharacterized, but the broker is contesting that the amount I am recharacterizing does not accurately reflect the net income according to formula of 26 CFR § 1.408-11.
The numbers here are made up, but the situation is basically that immediately prior to contributing the $7000 to the IRA the various securities in the account were worth $10,000. After contributing, I purchased 10 shares of Stock A for $600 each, leaving $1000 cash left. In the time since that purchase, the value of the assets in the account went from $17,000 to now $20,000 without any additional trading, dividends, deposits or interest (only market value increase of the held assets). The net income based on previous the formula would then be $1235.29 (but the earnings due only to the Stock A purchases are much less).
Now I have requested that the broker recharacterize by transferring the 10 shares of Stock A purchased after the contribution plus the remaining $1000 cash, since transferring the stocks purchased with the contribution captures all of the earnings attributable to the contribution. They are saying however that if I do this then they won't report the full contribution as having been recharacterized since the current market value of the shares of Stock A plus the $1000 doesn't equal $7000 + $1235.29 = $8235.29.
Surely this can't be correct, as recharacterizing $8235.29 would mean pulling income out of the account that is attributable to earlier years' contributions and not just the 2024 contribution. So what am I to do if they aren't going to provide the correct recharacterization amount on my tax forms?
