Since you made a full contribution when only a partial amount was allowed, You have two options:
- Recharacterize the excess amount: Transfer the excess from your Roth IRA to a traditional IRA and attach a statement to your tax return.
- Recharacterize the full contribution: Transfer the entire amount plus any related earnings to a traditional IRA and attach a statement to your tax return.
Here are the steps to Recharacterize:
Re-characterizing your contribution means re-classifying the contribution as if it were a traditional IRA instead of a Roth. This must be done before the due date of your return (generally April 15).
First, contact your plan administrator and follow their guidance to make your re-characterization.
Next:
To re-characterize your Roth contribution in TurboTax, follow these steps:
- Open or continue your return.
- Navigate to IRA contributions.
- TurboTax Online and Mobile: Go to IRA contributions.
- TurboTax Desktop: Search for IRA contributions and select the Jump to link.
- Select Roth IRA and Continue.
- Answer Yes on the screen, Did you make a Roth IRA contribution for 2024?
- Answer No on the screen, Is This a Repayment of a Retirement Distribution?
- On the next screen, enter your Roth contribution amount and Continue.
- Answer Yes on the screen, Switch from a Roth To Traditional IRA?
- On the next screen, Tell Us How Much You Transferred, enter the excess contribution amount (don't include earnings or losses) and Continue.
- On the screen, Roth IRA Explanation Statement, enter the original amount plus the amount of earnings or loss that were re-characterized.
- If you would like guidance for this section, select Fill in Template.
Tip: After you re-characterize, you can make this contribution nondeductible (depending on your income limit and work retirement plan) by making a backdoor Roth IRA conversion.
