I contributed $6500 to a Roth in 2017. TT tells me based on my income I contributed $3040 too much plus any gains. I agreed to remove it before April 15th. Now at the end of questions TT tells me I can contribute $3040 to a traditional IRA. Is this correct and why? It also ask me if I re characterized it? I do not know what that means still after much research. I will not be contributing to the traditional IRA with the money from the Roth. I will send monies from my checking account. Is this the right way to proceed. I am afraid if I contribute to the IRA I will be penalized.
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Yes, you can contribute to a traditional IRA because the income limitations for 2017 have been removed (as long as you or a spouse do not have access to a work retirement plan).
You are correct this is a change, see this info at the IRS here: https://www.irs.gov/retirement-plans/2017-ira-deduction-limits-effect-of-modified-agi-on-deduction-i...
Re-characterized means reversing a conversion back to a traditional or 401(k) type plan.
It sounds like your income is in a phase out range for the ability to contribute to a Roth. You can view these income limitations at the IRS here: https://www.irs.gov/retirement-plans/amount-of-roth-ira-contributions-that-you-can-make-for-2017
Yes, you can contribute to a traditional IRA because the income limitations for 2017 have been removed (as long as you or a spouse do not have access to a work retirement plan).
You are correct this is a change, see this info at the IRS here: https://www.irs.gov/retirement-plans/2017-ira-deduction-limits-effect-of-modified-agi-on-deduction-i...
Re-characterized means reversing a conversion back to a traditional or 401(k) type plan.
It sounds like your income is in a phase out range for the ability to contribute to a Roth. You can view these income limitations at the IRS here: https://www.irs.gov/retirement-plans/amount-of-roth-ira-contributions-that-you-can-make-for-2017
recharacterization means changing the type of IRA for that contribution or part of it.
Instead of taking out the excess you could have recharecterized the excess. That would give you two IRAs of different types.
But you did not know that at the time.
If does not have to be related to a conversion
The income limits have not been removed as you can see by looking at the page.
If you want to have two IRAs, Roth and traditional you can contribute as allowed by your MAGI
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