topic Backdoor Roth excess contribution in Retirement tax questions

Backdoor Roth excess contribution

ML7 — Fri, 31 Jan 2020 16:31:56 GMT

There seems to be an error in the roth recharacterization calculation. We are over 50 and it shows the full $7,000 as an excess contribution to income restrictions. However, all contributions were done to nondeductible IRAs.

Here's how I entered it in TurboTax:

-Checked Traditional IRA for contributions

-Answered No to repayment

-Entered 7000 for 2019 traditional contribution, 0 for amount between 1/1 and 4/15, 2020

-Entered 7000 for "switched" amount

-Entered explanation using template

-Answered No to prior excess

-Answered Yes to tracking nondeductible contributions

-Entered 0 for basis as of 12/31/2018 (we make contributions in January and immediately recharacterize for current year)

It then shows a penalty for excess contributions due to the income restriction.

Is this a known problem?

Re: Backdoor Roth excess contribution

dmertz — Fri, 31 Jan 2020 18:06:19 GMT

A "backdoor Roth" involves a Roth conversion, not a recharacterization. However, you told TurboTax that you did a recharacterization, which hopefully is not what you did, otherwise you actually did create an excess contribution to your Roth IRA because a recharacterization makes it as if the original contribution was to the Roth IRA, not to the traditional IRA.

A Roth conversion is reported separately on the tax return for the year in which the Roth conversion occurred.

Re: Backdoor Roth excess contribution

ML7 — Sat, 01 Feb 2020 15:03:27 GMT

Ugh. I've been doing it wrong (or at least referring to it incorrectly) for years.

Thanks for setting me straight.