What to do if deposited RMD to a traditional IRA by mistake?

[magicstar41000-y]

Please provide steps  to correct above mistakes. I know I can characterize the IRA deposit to Roth because I have w-2 earnings to cover the RMD amount.  I will report the RMD on 2023 tax.  Does turbotax help with form 8606?  Will I subject to penalty?  Thank you very much!

[DanaB27]

You cannot rollover an RMD therefore you made a new contribution to the traditional IRA and this cannot be more than the IRA contribution limits.

Yes, you can request with your financial institution the recharacterization of the traditional IRA to Roth IRA. To enter the recharacterization in TurboTax:

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 “Traditional IRA”
5. Answer ‘Yes” on the “Traditional IRA Contribution” screen
6. Answer “No” to “Is This a Repayment of a Retirement Distribution
7. Enter the contribution amount 
8. Answer “Yes” to the recharacterized question on the “Switch from a Traditional To a Roth IRA?” screen and enter the contribution amount (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.

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.

To enter your RMD distribution:

1. Click on "Search" on the top right and type “1099-R”  
2. Click on “Jump to 1099-R”
3. Enter the information from your 1099-R

[fanfare]

did you deposit into IRA more than you are allowed?

If yes, that is an excess contribution and you ask the custodian to "remove excess and earnings"

Do this before April 15

OR, request extension of time to file before April 15 and the deadline becomes Oct 15.

If you want to convert to Roth you have to make the non-deductible election first.

@magicstar41000-y 

[magicstar41000-y]

Thank you very much for your reply. Contact the financial institution and was told that individual turned 73 in 2023, IRS updated the required minimum distribution deadline to April 1, 2024.  Don't need to report RMD on 2023 return because did not take it but report both 2023 and and 2024 RMD on 2024's tax return(take 2023's RMD by April first and 2024's 12/31/2024.)  A 1099-R will be issued for both the 2023's and 2024's RMD in 2025. Does that sound correct?

Thank you again!

[fanfare]

You can' just ignore the 1099-R with Code R:

You have to

treat the contribution as having been made to the second IRA on the date that it was actually made to the first IRA.

You may have W-2 income but also your Modified AGI for Roth purpose may be large enough to prohibit a Roth contribution.