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Returning Member
posted Apr 12, 2024 12:43:08 PM

Traditional and Roth IRA contribution

I made a mistake and contributed $6500 to my Roth IRA account in 2024 for 2023.  I quickly realized that my income is going to be over the limit to contribute directly to Roth IRA.  I then "recharacterized" my Roth IRA plus gains to my Traditional IRA account, I then converted $6500 Traditional IRA back to Roth IRA (Back door contribution).  How do I deal with this mess in Turbo tax?  I saw someone else posted something very similar, I tried to follow the steps, however, it still told me that I over contributed to my Roth due to my high income and that I need to withdraw.  Please help,  Can you please listed all the steps instead of summarize.

 

Thanks

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1 Replies
Employee Tax Expert
Apr 13, 2024 7:09:02 AM

You will enter the recharacterization when you enter the contribution to the Roth IRA on your 2023 return:

 

  1. Login to your TurboTax Account 
  2. Click on "Search" on the top right and type “IRA contributions” 
  3. Click on “Jump to IRA contributions"
  4. Select “Roth IRA”
  5. Answer ‘Yes” on the “Roth IRA Contribution” screen
  6. Answer “No” to “Is This a Repayment of a Retirement Distribution
  7. Enter the Roth contribution amount of $6,500
  8. Answer “Yes” to the recharacterized question on the “Switch from a Roth To a Traditional IRA?” screen and enter the contribution amount of $6,500 (no earnings or losses) on the next screen.
  9. TurboTax will ask for an explanation statement where it should be stated that the original $xxx.xx plus $xxx.xx earnings (or loss) were recharacterized.
  10. On the screen "Choose Not to Deduct IRA Contributions" answer "Yes" since you are doing a backdoor Roth. (If you have a retirement plan at work and are over the income limit it will be nondeductible automatically and you only get a warning and then a screen saying $0 is deductible)

 

You will get a 2024 Form 1099-R  for the recharacterization with code R-Recharacterized IRA contribution made for 2023 and this belongs on the 2023 return. But a Form 1099-R with code R will do nothing to your return. You can only report it as mentioned above. Therefore, you can ignore the Form 1099-R with code R when you get it in 2025.

 

 

Next year on your 2024 return you will enter the conversion when you enter the 2024 Form 1099-R with code 2:

 

  1. Click on "Search" on the top right and type “1099-R”  
  2. Click on “Jump to 1099-R”
  3. Click "Continue" and enter the information from your 1099-R
  4. Answer questions until you get to “Tell us if you moved the money through a rollover or conversion” and choose “I converted some or all of it to a Roth IRA”
  5. On the "Review your 1099-R info" screen click "Continue"
  6. Answer "Yes" to "Any nondeductible Contributions to your IRA?" if you had any nondeductible contributions in prior years.
  7. Answer the questions about the basis from line 14 of your 2023 Form 8606 and the value of all traditional, SEP, and SIMPLE IRAs