Does anyone know if this is possible?
After entering the amount converted from a Traditional IRA to a Roth IRA, the Premium Tax Credit (PTC) went away. It now appears that I owe not only the tax on the converted amount (from traditional to Roth) I now need to repay the PTC.
The only way I see to avoid having to repay the PTC is to dissolve the Roth conversion.
Anyone have any knowledge of this tax situation?
@lisaannsala wrote:
I made the conversion without realizing the consequence, thus, I would like to just roll the Roth funds back into the IRA account they came out of.
Unfortunately the Tax Cuts and Jobs Act (TCJA) prohibited that a for any conversion after Jan 1, 2018. Once in the Roth, it cannot be put back.
Unfortunately a Traditional IRA distribution, whether converted or not, is taxable income, unless there was non-deductible basis in the IRS to offset some or all of the tax. That taxable income will add to your AGI and the PTC is based on your AGI.
What do you mean "back to a Traditional IRA"? Once converted, recharacterizations of Roth conversions are prohibited, and a Roth can never be converted to a Traditional IRA.
What I mean by "back to a traditional IRA" is that the funds WERE IN a traditional IRA. Then the funds were converted to a Roth IRA.
Upon completing 2019 taxes, I discovered that by adding those funds to the AGI to be taxed, the PTC disappeared and that tax credit needs to be repaid also.
I made the conversion without realizing the consequence, thus, I would like to just roll the Roth funds back into the IRA account they came out of.
You used to be able to do this, but your Congress recently took away that option.
@lisaannsala wrote:
I made the conversion without realizing the consequence, thus, I would like to just roll the Roth funds back into the IRA account they came out of.
Unfortunately the Tax Cuts and Jobs Act (TCJA) prohibited that a for any conversion after Jan 1, 2018. Once in the Roth, it cannot be put back.