topic Traditional IRA Contribution in Retirement tax questions

Traditional IRA Contribution

CJB-1959 — Mon, 10 Mar 2025 18:45:03 GMT

In 2024 I made a $8000 contribution to my Roth IRA as I anticipated working part-time last year but was unable to reach an agreement with the prospective employer on compensation. Because I had no earned income in 2024, I had to rescind the Roth IRA contribution which I did in January 2025, by moving the dollars ($8000 plus $1418.15 in taxable earnings) back to my regular brokerage account (Not an IRA account).

I now want to make a $8000 contribution to my Traditional IRA for 2024 to reduce my income tax liability. Can I still make a $8000 contribution to my traditional IRA since I reversed the Roth IRA contribution?

Turbo Tax says I can still make a 2024 contribution to my Traditional IRA but the online brokerage system is not allowing me to make the 2024 contribution as it is still showing a 2024 contribution to my Roth IRA? Thoughts? (Note: I have contacted Vanguard about this)

Re: Traditional IRA Contribution

MinhT1 — Mon, 10 Mar 2025 18:54:45 GMT

You said that you had no earned income in 2024 and had to withdraw your excess Roth IRA contribution.

You also need earned income to contribute to a Traditional IRA. Without earned income, you cannot.

Please read this IRS document for more information.

Re: Traditional IRA Contribution

CJB-1959 — Mon, 10 Mar 2025 18:57:58 GMT

My wife had earned income in 2024 before retiring on July 1, 2024. Does this change your response?

Re: Traditional IRA Contribution

MinhT1 — Mon, 10 Mar 2025 19:05:19 GMT

If your wife had earned income to cover your contribution, you can contribute to a Spousal Traditional IRA.

Please read this IRS document for more information.

Re: Traditional IRA Contribution

CJB-1959 — Mon, 10 Mar 2025 19:14:24 GMT

Thank you for taking the time to answer my question.

So when I "undid" my $8000 Roth IRA contribution should have I recharacterized it to my Traditional IRA vs. transferring the money back to the original source of the funds which was my regular taxable brokerage account? If so, can I rectify this by contacting the account custodian (Vanguard) to correct my error if I do so by April 15, 2025?

Any additional information you can provide would be greatly appreciated. Thank you.

Re: Traditional IRA Contribution

SusanY1 — Mon, 17 Mar 2025 18:27:45 GMT

Do reach out to Vanguard to at least ensure that the removal of the funds from the Roth was coded as withdrawal of excess contribution. They should then be able to further assist with making the proper Traditional IRA contribution prior to April 15.