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Level 2
posted Jul 15, 2020 7:44:35 AM

Recharacterization: in 2019 I contributed $7,000 to the IRA also transferred shares from IRA to Roth ($31,000). How do i calculate the earnings/loss? thank you. Adrian

one detail: the shares were bought in 2017 at much higher value, approx. $50,000

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1 Replies
Level 15
Jul 15, 2020 8:06:39 AM

The financial institution that does the recharactorization must calculate the earnings/loss and move that amount to the Traditional IRA and issue a 1099-R with a code R in box 7.

 

The earnings/loss are based on the value of the entire Roth from the time of the contribution to the time of removal pro-rated to the amount of contribution.

 

Once a dollar is in an IRA it is the same as any other dollar and does not have it's own earnings or loss.