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Level 2
posted Mar 12, 2025 11:34:50 AM

Back Door Roth IRA and withdraw of Excess Contributions

This is a similar post to this post but has many different situations, so I'm a bit confused too.

https://ttlc.intuit.com/community/taxes/discussion/back-door-roth-ira-and-excess-contributions/01/3433547#M1267514

 

Background

Normally I do backdoor roth IRA through first deposit 7k to traditional IRA and then convert it to roth. 

 

Timeline

Feb 2024, I deposited 6.5k to the traditional IRA for the year of 2023 and a few days later converted to Roth IRA account.

March 2024, when I supposed to deposit 7k to traditional IRA, I mistakenly directly deposited 7k to the roth IRA account.

End of 2024, I realize I made the above mistake and deposited 7k to the traditional IRA

Jan of 2025, I converted 7k (deposited end of 2024) from traditional IRA to Roth IRA. And withdrew the 7k+3k gain from the Roth IRA account.

Meanwhile (2025), on my Schwab broker withdraw form I indicated the broker to take the 32% federal tax withholding and 5% state withholding. So on my bank account I did not get the full 3k gain but less. I guess it’s because both the federal and state tax has been withheld.

 

1099R: when I received the 1099R this year(2025), it only have 6.5k on it.

 

Here is the part that I need help.

  1. Since I think the tax has already been withheld. Do I sill need to report the 3k gain?
  2. If so, I saw in order to avoid amend the tax form next year, I need to manually input a 1099 R.  Do I input two 1099R, one for the traditional IRA account that has 7k on it and the other one for Roth IRA has 7k on Box 1 and 3k on Box2a?

3. On the Roth IRA part, do I say on turbotax that I contributed Roth IRA on 2024?

 

Thank you all for the help

0 2 3886
1 Best answer
Expert Alumni
Mar 12, 2025 11:49:33 AM

Please see below for the answers to your questions:

 

  1. Yes, you do need to report the gain.  The tax you had withheld was just a prepayment, similar to the federal tax withheld on your paycheck.
  2. Yes, this is the correct method. You'll first input the 1099-R you actually received, based on how it was reported to you (the 6.5k conversion in February 24).  Next, you'll create one mock 1099-R to report the withdrawal on the accidental Roth contribution (NOT the rollover done in 2025- that will be properly reported in 2025). In box 1, report the total of the earnings and contribution, $10k, and in Box 2, the earnings, $3k. When you enter this in TurboTax, be sure to indicate the year on the form is 2025. 
  3. No, do not report that you contributed to a Roth IRA in 2024.  You removed the contribution and are paying tax on the earning separately, in step 2 above.

2 Replies
Expert Alumni
Mar 12, 2025 11:49:33 AM

Please see below for the answers to your questions:

 

  1. Yes, you do need to report the gain.  The tax you had withheld was just a prepayment, similar to the federal tax withheld on your paycheck.
  2. Yes, this is the correct method. You'll first input the 1099-R you actually received, based on how it was reported to you (the 6.5k conversion in February 24).  Next, you'll create one mock 1099-R to report the withdrawal on the accidental Roth contribution (NOT the rollover done in 2025- that will be properly reported in 2025). In box 1, report the total of the earnings and contribution, $10k, and in Box 2, the earnings, $3k. When you enter this in TurboTax, be sure to indicate the year on the form is 2025. 
  3. No, do not report that you contributed to a Roth IRA in 2024.  You removed the contribution and are paying tax on the earning separately, in step 2 above.

Level 2
Mar 12, 2025 12:36:56 PM

Thanks a lot!