topic Answered in comments. in Retirement tax questions

In 2015 I made an after-tax contribution to Trad IRA. In Jan of 2016 I recharaized that contribution to Roth IRA. Now I have a 2016 taxable withdrawal from my Trad IRA.

Chas56 — Tue, 04 Jun 2019 20:27:36 GMT

My trad IRA has both pre-tax and after-tax money. Is it possible that the recharacterization was actually a conversion? and the money moved was from the pre-tax portion of my traditional IRA?

Did you recharacterization or convert to a Roth - two tot...

macuser_22 — Tue, 04 Jun 2019 20:27:37 GMT

Did you recharacterization or convert to a Roth - two totally different things?

Do you have a 1099-R reporting it?
If so, what code is in box 7?
Is the IRA/SEP/SIMPLE box checked?

(If you have both before-tax and after-tax contributions is a Traditional IRA, you can NEVER only distribute the after-tax money - it is always pro-rated over the current distribution and the total years end value of all existing Traditional IRA accounts.)

My intent was to recharacterize, and I believe I did that...

Chas56 — Tue, 04 Jun 2019 20:27:39 GMT

My intent was to recharacterize, and I believe I did that. I have 1099-R forms, and they show R for the distribution code in box 7. IRA/SEP/Simple box is checked.

That says that is was a recharacterization but if you rep...

macuser_22 — Tue, 04 Jun 2019 20:27:40 GMT

That says that is was a recharacterization but if you reported it already in 2015 then you might not need to amend depending on how it was done.   The 1099-R form itself will not report it.

What did you report in 2015?
Did you enter it in the IRA contributions section as a recharacterization?  (If yes, then there would be a line 15a  explanation statement attached to your 2015 return)

Was there a 8606 form with an amount on line 1?     (If yes then it was reported as a non-deductible contributions and needs to be amended).

Was the IRA deducted on line 32 on the 1040 form? (If the contribution is there, then it was deducted and needs to be amended).

1) Yes, there is an explanation of line15a re the rechara...

Chas56 — Tue, 04 Jun 2019 20:27:43 GMT

1) Yes, there is an explanation of line15a re the recharacterization. 2) no form 8606 3) no IRA deduction on line 32, 1040, the contribution was after-tax money.

Then you did it correctly in 2015 with the explanations s...

macuser_22 — Tue, 04 Jun 2019 20:27:44 GMT

Then you did it correctly in 2015 with the explanations statement and the 2016 code "R" 1099-R can be safely ignored.

OK, I saw the amount listed on the input section of the 1...

Chas56 — Tue, 04 Jun 2019 20:27:46 GMT

OK, I saw the amount listed on the input section of the 1099-Rs and presumed that was moved over to the 1040 - not so. I'm feeling better now, thanks for your help.

On a related issue, my wife's 1099-R re the recharacterization of the contribution did not seem to transfer when docs were uploaded from Vanguard - since it isn't really relevant (money-wise), should I be concerned about that and try to make it upload?

I would not worry about the imports - it might be that a...

macuser_22 — Tue, 04 Jun 2019 20:27:46 GMT

I would not worry about the imports - it might be that a 1099-R with a code R is not reverent to a 2016 tax return.

A 2016 1099-R with a code "R" does not make any entries whatsoever on either a 2016 tax return or an amended 2015 tax return. It's only purpose is for the financial institution to notify the IRS of the recharacterization. The only proper was to report the recharacterization on your 2015 tax return is how you did it - in the IRA contribution sections and an attached line 15a explanations statement.

Entering it into 2016 with a code R will just tell you that you need to amend 2015, but does not offer any directions as to how to report it - just entering the same 1099-R into 2015 will do nothing.

Great, thanks again! It seems rare that I have actually d...

Chas56 — Tue, 04 Jun 2019 20:27:47 GMT

Great, thanks again! It seems rare that I have actually done the correct thing.

Answered in comments.

macuser_22 — Tue, 04 Jun 2019 20:27:49 GMT

Answered in comments.