1099-R

[Dberg128]

I rolled over a 401k to a traditional IRA becasue I am no longer employed. Then I made 2 non-deductible contributions to another IRA to convert to my Roth IRA.  After rolling over the $13k I realized that I contributed too much.  The questions are as follows:

1.  Does the Rollover 401K to IRA count towards my max contributions to an IRA when calculating the non-deductible contributions? (Two different IRAs)

2.  If the Rollover counts toward max IRA contribution, what is that max amount?

3.  Do I need to remove the excess non-deductible IRA contribution or can I convert to a 2025 contribution even though I no longer work?

4. Do I need to do anything specific in Turbo tax when entering the non-deductible IRA contribution removal of the excess? 

If there is anything else I need to understand before entering this section, please let me know.  Thank you!

4. 

[MaryK4]

No, the rollovers do NOT count as contribution for the annual limit.  If you still have a excess contribution, you can designate for 2025 for the corrective contribution, but you must be qualified to make the 2025 contribution (so you must have compensation).  Because you are no longer taxed on the earnings for the excess contribution, you do not have to make any changes/entries on your tax return.

[Dberg128]

If I no longer work but my husband does, can we use this contribution as a 2025? His income limit does not allow for traditional Roth's.  We are trying to figure out if we should remove the excess before 4/15/25 or leave it in there and classify as 2025.  Turbo tax has already calculated the excess amount to be rolled over to 2025 and has taxed us for the IRA and is requiring form 5329.  Thanks for your advice.

[DaveF1006]

Yes, you may be able to classify the excess contribution as a 2025 contribution, but there are some important considerations. Since your husband is still working, you might qualify for a spousal IRA, which allows a non-working spouse to contribute to an IRA based on the working spouse’s income. However, since his income exceeds the limit for a traditional Roth IRA, you’ll need to check whether a backdoor Roth conversion is an option.

Regarding the excess contribution, you generally have until April 15, 2025, to remove it without penalty. If you leave it in the account, it may be subject to a 6% excise tax each year until corrected. TurboTax requiring Form 5329 suggests that the excess contribution is being flagged for tax purposes. This form is used to report additional taxes on excess contributions, early withdrawals, and other retirement account issues.