@tyentr99 wrote:
@Opus 17
I currently have $0 in any traditional IRA. I had rolled over my old traditional IRA with a balance of $1,894.76 to my Roth this year. I have not made any contributions a traditional IRA this year.
My Roth IRA currently has $1,688.42 in it.
I made the $4,000 regular withdrawal today, so less than a day old.
Thanks!
OK, so you have 60 days to do a rollover, that is a transfer from one Roth IRA to another or even back to the same IRA, without tax consequences.
I would send the $4000 back to the Roth IRA as a rollover, not an original contribution. This might take some extra paperwork (i.e. there might be a form to fill out that is more than a simple contribution). But note that you can only do this kind of rollover (where the money comes to you in between) once per year. You can do as many direct transfers as you like.
Once the money is safely in the Roth IRA, you have two options. One is to withdraw the excess (plus earnings) via the special procedure. But if your ultimate goal is to have the money in a traditional IRA as a non-deductible contribution that you can convert to a Roth (backdoor Roth), then you don't need to withdraw and re-deposit it. Just do a recharacterization. You can recharacterize the Roth contribution as a traditional IRA contribution, this means the trustee will move the $4000 contribution (plus earnings) into a traditional IRA, as if it had been there all along. Then later you can to a conversion to a Roth IRA as a "backdoor" Roth. Yes, it's a lot of steps to end up right where you are now, but that's how the law works. When you do the Roth conversion, the earnings will be taxed at that time. But if you do the "withdrawal of excess" procedure the earnings will still be taxed.
Then, if you want to maximize your IRA contributions, you can make another $3000 non-deductible contribution to a traditional IRA (to get to a total of $7000 contributions for the year) and convert that to a Roth.
