Backdoor Roth IRA Contributions - 2022 & 2023

[cchilton18]

Hello,

For the tax years of 2022 and 2023, I made backdoor contributions to my Roth IRA as my MAGI exceeded the Roth IRA contribution limits.  In 2022, I made the contribution in fiscal year 2023, but for tax year 2022 (i.e. I contributed the money in January 2023 for tax year 2022).  For tax year 2023, I made the contribution in December of 2023.  In both cases, all the contributed money to my Traditional IRA was recharacterized into my Roth IRA as soon as the transaction settled.

In total my contributions were $6K in 2022 and $6.5K in 2023, the max contributions in both years.

I have completed my taxes for the current year and I think I entered my taxes correctly for the 2022 and 2023 to capture both backdoor contributions.  However, on my 2023 taxes, I am being told that I have an excess contribution for $6.5K in 2023.  I confirmed that I filled a Form 8606 in 2022 detailing out the contribution I made for that tax year. 

All in, I feel like I am lost here as my understanding is that everything I have done so far is correct under the backdoor contribution procedures.

Any help is greatly appreciated.  Also happy to provide more details where needed.

[AnnetteB6]

Since the message you are seeing is related to the 2023 contribution, revisit that section of your return where you entered the Traditional IRA non-deductible contribution for 2023.  Just double-check your answers in that section and see if the error goes away.

Also, if it does not, take a look at the following TurboTax help article to see the process step-by-step:

How do I enter a backdoor Roth IRA conversion?
 

[cchilton18]

Edit: I think the source of the error might be coming from the "Tell Us How Much You Transferred" portion.  The question asked is how much of my Traditional IRA contribution did I "recharacterize" to a Roth IRA contribution.  As I made a backdoor Roth IRA contribution, the amount I should answer this question with is $0, correct?  Due to the nature of the backdoor Roth IRA, I am contributing to a Traditional IRA and not recharacterizing that contribution to a Roth IRA contribution, right?  Going through the whole section again after answering this question with $0 does not state that I over contributed to my Roth IRA (which makes sense) and it states that I am not eligible for the IRA deduction (which makes sense).

So I have gone back through the Traditional IRA Contribution section again on my return and I am still getting the same result at the end of the section.  I then followed the steps as laid out on the link provided and still got the same message stating that I over contributed to my Roth IRA in 2023 by $6,500.  I know this cannot be the case because I contributed $6,500 to my Traditional IRA in tax year 2023 and subsequently moved that same contribution to my Roth IRA when it settled (i.e. completing a backdoor Roth IRA contribution).

I have reconfirmed that I have a Form 8606 from my 2022 taxes, but I think the source of this problem is related to the fact that my 2022 contribution was made in January of 2023 for tax year 2022.  This is show on the 1099-R I have received for 2023 which states I have $12,500 in Traditional IRA contributions then Roth IRA conversions, even though that $12,500 covers the contribution made for 2022 in 2023 as well as my contribution made for 2023 in 2023.

[fanfare]

A conversion cannot result in an excess contribution to the Roth.

You must have told TurboTax you contributed to your Roth.

That is not allowed since you used your allowable amoun on the Traditional IRA.

@cchilton18 

[HaloLegion]

Hello @cchilton18 ,

I have the exact same problem as you. Same numbers - except that I think I made the contributions for both 2022 and 2023 in a single shot but characterized as $6000 for 2022 and $6500 for 2023. 

Unfortunately the standard wizard questions are also leading me to a page that says I over contributed to the Roth IR in 2023 by $6.500

Were you able to find a resolution?

[cchilton18]

This got the software to return the result I was looking for and I believe this should be the right answer.  On the "Tell us how much you transferred" page, I put in $0 transferred from my Traditional IRA contribution to my Roth IRA.  I believe $0 is the right answer because the question prompts specifically to exclude "conversions or rollovers" to a Roth IRA.  As the money I contributed to my Traditional IRA was then converted to my Roth IRA, my Roth IRA contributions on this page should be $0.

[fanfare]

A conversion cannot result in an excess contribution to the Roth.

If your 1099-R has 12,500 in box 1

then in order to get the correct result your 2023 Form 8606 has to show $6,500 on Line 1,

and $6,000 on Line 2.

@HaloLegion 

[Anonymous]

Hey I have the same exact issue and know that I need to get my 8606 to look the way you are describing. I have been clicking different options and cannot get the $6500 from 2023 to show up on line 1. I do have the $6000 from 2022 shown on line 2. 

[fanfare]

@Anonymous 

you make an entry in TurboTax for an IRA contribution of $6,500 .

Then you make the election to make it non-deductible.

this puts it on Form 8606 Line 1.

If you are not eligible for a deduction, TurboTax will do this automatically.

Then enter your conversion 1099-R.

[DanaB27]

As fanfare mentioned you will need to enter the nondeductible contribution to the traditional IRA to see the basis on line 1 of your 2023 Form 8606. Please review the steps below:

1. Login to your TurboTax Account 
2. Click on "Search" on the top right and type “IRA contributions” 
3. Click on “Jump to IRA contributions"
4. Select “traditional IRA”
5. Answer “No” to “Is This a Repayment of a Retirement Distribution?”
6. Enter the amount you contributed
7. Answer “No” to the recharacterized question on the “Did You Change Your Mind?” screen
8. Answer the next questions until you get to “Any Nondeductible Contributions to Your IRA?” and select “Yes” if you had a nondeductible contribution before this tax year.
9. Enter your basis in the Traditional IRA from your 2022 Form 8606 line 14 (if you had a basis in the prior year)
10. On the “Choose Not to Deduct IRA Contributions” screen choose “Yes, make part of my IRA contribution nondeductible” and enter the amount (if you have a retirement plan at work and are over the income limit it will be nondeductible automatically and you only get a warning and then a screen saying $0 is deductible).

@Anonymous 

[velvia1000]

#10 question does not pop up.

[AnnetteB6]

If none of your Traditional IRA contribution is eligible to be deductible, then the question about making part of the contribution non-deductible will not pop up.  If none can be deducted, then it is assumed that all will be non-deductible.

@velvia1000