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Glenny603
New Member

Roth IRA to Tranditional to Backdoor Roth

Hello,

 

I made the mistake of contributing the full amount to my Roth IRA at the beginning of the 2022 calendar year. Then when I went to file my taxes, I found out I went over the MAGI limit and needed to remove $4,740 from the Roth IRA. Over that 14 month period, the $4,740 grew to about $5,600. So I moved the excess ($4,740 + $860 earnings) into a traditional IRA. Then 3 days later did the backdoor Roth for the full amount (over the 3 days the $5,600 dropped to $5,504). So no problem for the 2022 taxes. Then during the year I put the full $6,500 into a Traditional IRA, and moved to Roth IRA right away. Now I am in the 2023 taxes and have two 1099-R forms. The Roth 1099-R ($5,600), and the Traditional 1099-R ($12,004). 

 

After filling in the details into Turbotax, I am getting a taxable amount of $764 for the growth of the Roth excess contributions while in the Roth IRA. Is that accurate? Should I be taxed on the excess even while it was in the Roth?

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1 Reply
DanaB27
Expert Alumni

Roth IRA to Tranditional to Backdoor Roth

Yes, this sounds correct.  When you recharacterized the Roth contribution then the earnings are deemed to have been earned in the traditional IRA. You had a total basis of $11,240 and converted $12,004. Therefore, the earnings of $764 were taxable during the conversion. 

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