Back door Roth IRA changed my mind

[Crypto]

In 2021 I opened up a back door Roth IRA conversion for 2020 and funded it but didn’t invest in anything.  When I found out about  the prorata rule problem because I already have an existing Ira from years ago, I closed it  within about a week and took a full distribution (I’m over 59 1/2).

Questions:

-Do I still need to fill out and file the 8606 to declare the contribution as no deductible and let IRS know I had an IRA momentarily and had a distribution of the original principal amount?

-Am I stuck with proration because of my other IRA even though I immediately closed it?

-Am I “exempt” from having to file an 8606 because IRS publication 590-A, 590-B indicates that there can be exceptions for a return of contribution. 

[fanfare]

what did you tell the custodian.?

Did you have the custodian reverse your contribution?

Or did you just take the money out?

It make a big difference in your reporting requirement.

If the latter, you  owe tax on that distribution, less your prorated non-taxable basis that you were so concerned about, but your funds are not in a Roth IRA.

[Crypto]

Thanks for your reply and great question.  The box I checked on the IRA Distribution request form to the custodian was “Removal of excess/Nondeductible contribution plus earnings before tax filing deadline.  Tax year in which contribution was made:  2020.  Is the contribution plus earnings being removed in the same year?  Yes.  The amount of earnings I calculated was $0.”

And there was no IRS code associated with this choice on the form, whereas most of the other choices for reason for contribution had an IRS code with it.

I don’t think the custodian reversed it, but I don’t know for certain.  They sent me my contribution back (there were no earnings) about a week or so after I opened it and they said they closed the IRA.  On the distribution request form it indicates that distributions authorized using the form will be reported to the IRS as an IRA distribution.

I was hoping to somehow get out of this being a taxable event since I closed it right away as a mistake and there were no earnings.  It’s the proration thing I’m most concerned about and wondering if there’s a way out.

It was a back door Roth IRA…