Recharacterization from Traditional IRA to Roth IRA

[sammoon]

Hi,

I contributed $6000 to my traditional IRA which is the maximum allowable for me. Then, I recharacterized in a week to Roth. But, my broker transferred $6470 including earnings (which is not correct). Anyways, my question is do I have to remove the excess $470 to avoid penalty?

[MinhT1]

If your contribution of $6,000 was nondeductible and assuming that you only have that one Traditional IRA, then when you recharacterize it to a Roth IRA, you also transfer the earnings.

In a recharacterization, the contribution is deemed to have been made in the second IRA (the Roth IRA) and the earnings earned in that second IRA.

So your broker was correct in transferring the contribution together with earnings and you have no extra tax to pay.

[sammoon]

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@MinhT1 wrote:

So your broker was correct in transferring the contribution together with earnings and you have no extra tax to pay.

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Thank you very much and appreciate your fast response.  So, I take it that I can file it and don't have to worry about penalty or extra tax to pay.  That's wonderful!  Thanks again.