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wollner-adina
New Member

If I have a 1099-R because of a recharactarization of a Roth to a trad IRA, how do I denote that i put into my trad account? This said i can’t deduct my trad contribution

 
3 Replies
DanielV01
Expert Alumni

If I have a 1099-R because of a recharactarization of a Roth to a trad IRA, how do I denote that i put into my trad account? This said i can’t deduct my trad contribution

Do you have a pension plan at your job?
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wollner-adina
New Member

If I have a 1099-R because of a recharactarization of a Roth to a trad IRA, how do I denote that i put into my trad account? This said i can’t deduct my trad contribution

I have a 401k plan if that is what you are referencing.
DanielV01
Expert Alumni

If I have a 1099-R because of a recharactarization of a Roth to a trad IRA, how do I denote that i put into my trad account? This said i can’t deduct my trad contribution

Because you have a retirement plan, you cannot take a deduction on a contribution once your income reaches certain limits.  The fact that you have recharacterized your Roth contribution to a Traditional IRA means that your income is too high to take a deduction.  

Since this is the case, you may wish to complete the second half of what is known as a back-door Roth contribution.  Now that you have made a nondeductible Traditional IRA contribution, you may elect to convert the contribution back into a Roth.   A conversion of a Traditional IRA to a Roth is not limited by income, but there are a few factors.  First, you must convert the entire Traditional IRA, which means if there are any deductible contributions in the IRA you must now include them as income and pay tax on those amounts.  Second, any growth in the IRA will be taxable regardless of whether the contributions were or were not originally deductible.  And third (because of the law change in the Tax Cuts and Jobs Act), once you convert the funds to a Roth, you cannot recharacterize the conversion back into a Traditional IRA.  

It is  a tax strategy that many higher earners use.  Consult a financial planner to see if it makes sense for you.  This was tax advice, not financial planning advice.

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