topic Re: Another Roth Recharacterization Question in Retirement tax questions

Another Roth Recharacterization Question

Lukester1980 — Fri, 28 Jan 2022 21:13:13 GMT

Last year, in Mar 2021, my wife and realized that we would exceed the Roth contribution limits for tax year 2021. We stopped our monthly Roth contributions with Fidelity after 2 months, then had Fidelity do a recharacterization back into our accounts. We did not recharacterize to our tIRAs. We received 1099-Rs last week for the gross distribution and taxable amount, with codes 8J in block 7. When inputting this into TT, it says we are to pay an early withdrawal penalty of 10%. We've had our Roth IRAs for greater than 5 years and are both over 591/2. Is this correct? In addition, the entire Roth contributions (not just the taxable amounts) appear to be added to our AGI even though we did the "undo button." Is this accurate? Doesn't make sense to me. TIA to all.

Re: Another Roth Recharacterization Question

ErnieS0 — Fri, 28 Jan 2022 23:47:48 GMT

Form 1099-R, Box 7, Code J is "Early Distribution from a Roth IRA". That is what is triggering the 10% early withdrawal penalty.

During what month did you turn age 59 1/2 in 2021? Was it after you withdrew money from your accounts? Distributions before your turn 59 1/2 after subject to the 10% early withdrawal penalty.

Re: Another Roth Recharacterization Question

Lukester1980 — Fri, 28 Jan 2022 23:52:05 GMT

I am 63. Turn 64 in May. Have had these Roth accounts for >5 years. I'm perplexed.

Re: Another Roth Recharacterization Question

ColeenD3 — Sat, 29 Jan 2022 00:07:50 GMT

If you feel that the code is incorrect, reach out to Fidelity for an explanation. It is possible they made a mistake.

Re: Another Roth Recharacterization Question

Lukester1980 — Sat, 29 Jan 2022 14:55:01 GMT

I think you might be on to something. We've had our Roths for well over 10 years. However, we rolled them over from USAA to Fidelity just over 2 years ago. Maybe Fidelity thinks the Roths are only 2 years old. I'll contact them.