Don't fully qualify for Roth IRA, but investment lost significant value

[Misse123]

For 2021, I don't fully qualify for a Roth IRA, $1530 of the $6000 contribution needs to be withdrawn before the due date of my return. However, that investment has lost over $4000 so I'm trying to determine if I do need to withdraw $1530, or how much to withdraw, and if there is a way to keep my cost basis.

[DanaB27 · Accepted solution]

Please make sure that you requested a withdrawal of the excess contribution plus earnings with your financial institute to get correctly coded 1099-R. Your financial institution should be able to calculate any earnings or losses.

Please see Excess Roth contribution because of MAGI for additional options about your excess contribution.

[Misse123]

Thanks @Dana, if I recharacterize to a Traditional IRA, can I then do a backdoor Roth IRA?

[JulieS]

Yes, at this moment you can roll the recharacterized amount to a Roth IRA. 

The Build Back Better plan has provisions to close this loophole, but as of today it has not passed the Senate.