IRA investment made in wrong year

[mailkaul]

My financial advisor made the IRA investment meant for tax year 2022 towards 2023 last year before the filing deadline. We didn’t realize until we tried to deposit the amount for tax year 2023 this year. The custodian is refusing to fix the error. I have already claimed the IRA contribution on my 2022 tax returns. What are my options to fix this on my 2022 tax returns?

Also should I just forgo my investment in IRA for 2023 to avoid any further tax implications or excess contributions?

thanks!

[dmertz · Accepted solution]

The deadline to correct the contribution to be a 2022 contribution was April 18, 2023, so it's now too late to change the contribution to be a 2022 contribution.

You must amend your 2022 tax return to remove the IRA contribution entry.  If the contribution reported on your 2022 tax return was a deductible contribution, you'll need to pay the tax balance due that results from the increase in your 2022 taxable income.  There could be additional amounts due if the elimination of this contribution reduces any Retirement Savings Contributions Credit originally claimed.

The regular contribution limit for 2022 was $6,000.  Compensation permitting, you can make an additional IRA contribution for 2023 to bring you up to the $6,500 regular contribution limit when added to what you have already contributed for 2023.