Hi!
I contributed to my Roth IRA for 2025 and 2026, but it turns out my combined income (married filing jointly) is over the limit, so I'm not eligible to make direct Roth contributions. I called my bank to see if I could reclassify the contributions. They told me I can contribute to a Traditional IRA instead, but I wouldn’t be able to take the tax deduction due to my income level.
My CPA didn’t mention this option, and I haven’t been able to find clear information online confirming that I can still contribute to a Traditional IRA (non-deductible) under these circumstances. Can anyone clarify this for me?
Thanks!!
First, as of this date, you can only contribute for 2025. It is too early to contribute for 2026. You can contribute retroactively for 2024 only if you are located in an area where there was a federal disaster and the IRS has given you an automatic extension to file. If you are located in an area where the normal deadline was April 15, it is too late to make a contribution for 2024, even if you got an extension. (Or, you could contribute for 2024 if you made the contribution before April 15, 2025.)
Your contribution limit for 2025 is $7000 or $8000 if over age 50. If you contributed less than that amount, it will all count for 2025. If you contributed more, you need to remove that excess no matter what you do with the rest.
Can you first clarify how much you contributed, and when, and for which years?
Yes, you can make non-deductible contributions to a traditional IRA (which includes recharacterizing a Roth contribution as a non-deductible traditional IRA contribution)—that has some strings and rules, and we can cover that after you clarify the other.
See IRS Pub 590-A regarding contributions to an IRA: https://www.irs.gov/pub/irs-pdf/p590a.pdf
Once you make a nondeductible contribution to an Trad IRA you can then convert it to Roth right away without paying tax, provided you don't have an existing Trad IRA so your balance consists entirely of the non-deductible contribution (basis). This "backdoor Roth' process is used by high income folks who can't contribute to the Roth directly.
All of this (tracking your non-deductible contributions / basis in the IRA, and tax calculations for Roth conversion) occurs on Form 8606.
Fidelity and Schwab usually have good information on these topics, see
https://www.fidelity.com/learning-center/personal-finance/backdoor-roth-ira