I contributed $5500 to a traditional IRA and recharacterized $1450 to a Roth IRA. Is there an income limit to recharacterizing from a Traditional IRA to a Roth IRA?

I have entered the recharacterization amount into TT and now it says I have a penalty to pay.  I thought I could recharacterize for the IRA to a ROTH and only pay tax on any gains from the date of the transfer?
dmertz
Level 15

Retirement tax questions

Although permitted (as long as you are under the income limit for the amount of the Roth contribution), it's a bit unusual to recharacterize a traditional IRA contribution, or a portion thereof, to be a Roth IRA contribution instead.  It's much more common to recharacterize a Roth IRA contribution or a Roth conversion.  Are you sure that you did a recharacterization of a portion of the traditional IRA contribution and not a Roth conversion of that portion?

Is your modified AGI under the limit for making a $1450 Roth IRA contribution?

<a rel="nofollow" target="_blank" href="https://www.irs.gov/retirement-plans/plan-participant-employee/amount-of-roth-ira-contributions-that...>

Retirement tax questions

Thanks.  I did a conversion of $1450 from my ira to my Roth IRA.  My AGI is >132k as a single filer.  Does this mean I cannot make the conversion?  I understand I will be taxed on gains, is that correct?
dmertz
Level 15

Retirement tax questions

Since you did a conversion and not a recharacterization, TurboTaxDexter's answer applies.
DexterS
New Member

Retirement tax questions

There is no income limit on ROTH conversions.

A Conversion is from Conventional IRA to a ROTH IRA.  Re-characterization if from ROTH back to Conventional IRA.

Your Conventional IRA generally has no basis.  None of the money in the account was included in your taxable income unless you made non-deductible contributions to your IRA.  When you convert it to a ROTH all of the money converted is taxable.