@lhoffman0823 wrote:
Hi Opus, thanks for reaching out. There isnt anywhere on my taxes or any sort of payment voucher that should print out?
I contributed $6960 to an employer funded 401k plan. And $600 to a Roth elsewhere. I was alerted during taxes that I would need to take out the excess from my roth and to a backdoor roth deposit. I worked with someone through the chat who told me about the backdoor option. I didnt write down the exact number, assuming a voucher, notice or alert would print on my taxes with the amount I needed to take out. But now looking through my return there is nothing listed with the overage.
Nothing would print out because, if you filed a return where you said you would fix the problem before the deadline, the problem itself would not be part of the tax return.
If your income is over a certain limit, you can't contribute to a separate Roth IRA. The limits are here.
https://www.irs.gov/retirement-plans/plan-participant-employee/amount-of-roth-ira-contributions-that...
If you leave the money in the Roth IRA you will pay a 6% penalty this year and every year the money remains in the IRA. You apparently told Turbotax you would remove the funds. You have two options.
1. Recharacterize the contribution as a traditional IRA contribution. The Roth IRA broker would remove the $600 and any earnings that have accumulated, and transfer them to a traditional IRA. This would be a non-deductible contribution, so your tax return must declare the non-deductible contribution on form 8606. Do you have form 8606? If not, then you need to amend your return. If you do have form 8606, then you already told Turbotax you would do this so you need to follow through.
2. Or, you can remove the funds from the Roth IRA as a "return of excess contribution." This is a special withdrawal, not a regular withdrawal, and must be done by April 15. The IRA custodian must also return to you any earnings attributed to the returned contribution. Those earnings are taxable income on your 2024 return even though they are paid to you in 2025. If you have taxable earnings, that again would require an amended return to report them and pay the tax.
A "backdoor" Roth IRA consists of making a non-deductible contribution to a traditional IRA, and then converting it to a Roth IRA. This only works if you have no other tax-deductible funds in any other traditional IRAs. To do a backdoor Roth IRA with this money, you would first recharacterize the Roth IRA contribution as a traditional IRA contribution. This must be done before April 15, 2025, and gets reported on form 8606 on your 2024 return even though it happens in 2025. Then, after the transaction has settled a few days, you convert the traditional IRA to a Roth IRA. The $600 basis is not taxable, but any earnings will be taxable on your 2025 tax return. (Even though the recharacterization is done in 2025 and counts for 2024, the conversion done in 2025 counts for 2025.). The end result is that the money is legally in a Roth IRA without being directly contributed to a Roth.
And note, this doesn't work properly if you have pre-tax or tax-deductible money in any traditional IRA account.
