Excess Contribution/Recharacterization Question

[cchrose3221]

Hello,

Under TurboTax > Deductions & Credits > Traditional and Roth IRA Contributions, I had a question.

In 2021 I contributed 6000 to my Roth IRA only to realize due to income I was not supposed to contribute anything to my Roth IRA that year. I recharacterized the full 6000(+gains/losses) to a traditional IRA in Oct. 2021, and got the corresponding 1099-R by ~Feb. 2022 (code N). When I did my taxes for 2021, I documented a recharacterization explanation then. 

When doing my taxes for 2022, one of the questions asks, "Do you have any excess Roth contributions? Tell us if you contributed more to a Roth IRA than was allowed in 2022 or any previous year".

1. Does the 2021 recharacterization get treated as an "excess Roth contribution" and the answer is "yes" to that question? Or is a recharacterization on time not treated as excess? 

2. If the answer is "yes", is the excess Roth IRA Contribution amount I enter in the next question 6000 or 6000(+capital gains) from 2021?

3. Is there anywhere else when doing my 2022 taxes that the 2021 recharacterization (either the 6000 or the 6000+gains/losses) shows up? 

[DanaB27 · Accepted solution]

1 and 2. No, you don't have an excess contribution in the previous year because you recharacterized it. You will answer "No".

3. No, the 2021 recharacterization won't be entered in your 2021 return.

If you elected on your 2021 return to make the recharacterized contribution nondeductible (or it was automatically nondeductible) then you should have a 2021 Form 8606 with the basis on line 14. Please keep that for your records. You will need to enter it when you take a distribution or make a conversion.