Thank you so much for your valuable advice!
Yes- the ENTIRE balance of the Roth IRA at Brokerage B was transferred to a previously empty Roth IRA at brokerage A. That $7,000 contribution in January 2024 was for 2024 and meant for recharacterization now. I did file extension for 2024 tax return.
I contributed $7000 in Jan 2024 for that needs to be recharacterized now, and I also contributed $7000 in Jan 2025 that is meant for 2025 and do not wish to recharacterize this.
Question:
I wonder if the AOB is $12,000 + $7,000 + $7,000 = $26,000 is fair because the contribution $7000 in Jan 2025 were not part of the balance when the 2024 contribution started growing. Should we exclude the 2025 contribution's impact?
My account now has 2 contributions (2024, 2025) and I just want to recharacterize the 2024 contribution, is the following correct?
NIA=C×[(A−B)/B]
Where:
- C = Amount of the contribution I want to recharacterize ($7,000 for 2024)
- A = Current value of the entire Roth IRA at recharacterization time
- B = Value of the Roth IRA when the 2024 contribution was made, including that contribution
Since I don't want to recharacterize the 2025 contribution, should I adjust both A and B to exclude:
- The 2025 contribution amount ($7,000)
- Any earnings or losses associated with that 2025 contribution
So my adjusted values would be:
- Adjusted A = $26,604 - $7,000 - (any earnings on 2025 contribution)
- Adjusted B = $12,000 + $7,000 = $19,000
