Reversing an unintended ROTH conversion

[G237]

I contributed $7000 to 2024 traditional IRA cash account at Wells Trade, and wanted to do a backdoor ROTH conversion. I chatted with an agent who sent me a docusign to request for this conversion.  However, I ticked the box in the form that said "Convert the entire account". The bank has now converted the entire account with assets of $585,000 which will cost me a steep tax bill next year. We have no money to pay this huge tax bill, and we are looking to see if there is a way to reverse this ROTH conversion that was in part a mistake on the behalf of the bank. The agent never bothered to verify this and the bank converted the account without confirming this with us. Will there be other implications for us, if at all the bank agrees to consider this reversal? Please help

[dmertz]

There is no recourse. Roth conversions are irrevocable, made so by the Tax Cuts and Jobs Act of 2017, and you are obligated to pay the taxes.  You can request a payment plan with the IRS or you could take a distribution from the Roth IRA to pay the taxes, but if you are under age 59½ you may be subject to an early-distribution penalty on some or all of the distribution.

"I ticked the box in the form that said 'Convert the entire account'."

This is not a bank error.  It would likely be fraudulent for the bank to "reverse" the conversion and issue a corrected Form 1099-R that indicates that no such distribution ever occurred from the traditional IRA.

This might not be as bad as it seems because the $585,000 would eventually be taxable anyway, albeit likely at a lower tax rate.  What can now remain in the Roth IRA will grow tax free instead of tax deferred, so there will be some savings on future taxes from that that will somewhat offset the taxation at the higher tax rate.

I'm not sure why you would even have been attempting a "backdoor" Roth since the majority of any amount converted would be taxable since you had such a large balance in traditional IRAs.