Form 5329 (Ineligible Roth)

[mahoosuc]

Hi, I believe I need to fill out form 5329 on my 2023 taxes to pay the penalty for an ineligible Roth contribution I made in 2022 and still had in my account at the end of 2023 (long story, but I recharacterized the contribution instead of converting it to Roth). However, Turbotax is not sending me to that form when I do my taxes. Is there a way to insist it gives me the form, or another work-around? Or perhaps there is something I am missing.

Thanks!

[mahoosuc]

Thanks. I called them and they didn't come up with any work-around, just that the software would pop up the form if it was required. I'm still thinking I need to fill it out since I had the tax year 2022 ineligible contribution still in my account at the end of 2023 (I am going to remove it before the end of this year).

I suppose I can go and file that as an amendment when I take it out, but that seems like too many steps/risky.

Is there a chance I entered it wrong? How I discovered all of this was when I entered my 1099-Rs the software recognized these as a recharacterization and not a conversion and prompted that I may need to amend my 2022 taxes because of it...

[fanfare]

For a 2022 Roth Contribution:

recharacterization: the original amount to the first IRA you report as contribution to the second IRA, earnings move but are ignored.
You must use a trustee-to-trustee transfer before the due date April 15,2023 ( or Oct 15, 2023 if 1040 was timely filed..).
You will instruct trustee to calculate the allocable earnings.

report this on your tax return for the year during which the contribution was made.
Treat the contribution as having been made to the second IRA on the date that it was actually made to the first IRA.

--- If you recharacterized in time, then it is no longer a Roth contribution and it is not an excess contribution. as long as you had earnings in 2022 no less than  the contributed amount.

It may be a non-deductible contribution in whole or in part depending on your AGI.

That is the reason you must amend 2022.

@mahoosuc 

[fanfare]

If you recharacterized a Trad IRA contribution to Roth IRA, but ineligible, you have a 6% penalty for 2022, 2023 and ongoing years until you remove the contribution.

In this case, any earnings earned in the Roth remain in the Roth.

@mahoosuc 

[mahoosuc]

Thanks. Yes that’s my case but TurboTax is not prompting me to pay the penalty. 

[fanfare]

After starting amend, follow the steps

See this post

https://ttlc.intuit.com/community/taxes/discussion/form-5329-without-a-1099-r-in-online-version/01/3...

In desktop program, you can open Form 5329 directly.

@mahoosuc 

[mahoosuc]

Thanks. I think I figured it out. Really appreciate your help.