In 2019, I contributed $6500 to a Roth IRA. In December 2019 I recharacterized that to a new traditional IRA (having no other trad. IRAs), which came out as $7787 including earnings. I converted that traditional IRA, 2 days later back to the Roth IRA, now $7787.
Turbotax says I had an excess contribution to the traditional IRA of $787, and have a penalty. It says to avoid the penalty, I must withdraw that amount from the traditional IRA. It already knows the balance of the traditional IRA is $0.
Do I need to withdraw that amount from my Roth IRA? Do I just tell Turbotax I withdrew $787? Something else?
Thanks!
Are you sure that your contribution for 2019 was $6,500 and not $7,000? $6,500 was the limit for 2018 for someone over age 50; the limit for 2019 was $7,000. Only a contribution made for 2019 was eligible to be recharacterized in December 2019.
The TurboTax page that asks you to "Tell Us How Much You Transferred" is badly named. When TurboTax asks this, you must enter the amount recharacterized, $6,500, not the amount transferred. Go back and correct that entry.
Are you sure that your contribution for 2019 was $6,500 and not $7,000? $6,500 was the limit for 2018 for someone over age 50; the limit for 2019 was $7,000. Only a contribution made for 2019 was eligible to be recharacterized in December 2019.
The TurboTax page that asks you to "Tell Us How Much You Transferred" is badly named. When TurboTax asks this, you must enter the amount recharacterized, $6,500, not the amount transferred. Go back and correct that entry.