Reporting IRA recharacterization when form 1099-R not available yet

Forum|Forum|4 years ago
March 22, 2022
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I made $3000 contributions to my Roth IRA for 2021 throughout the year 2021 and then realize that I won't qualify due to income limit.

I recharacterized all of that $3000 (with loss) to Traditional IRA on Feb 14, 2022, but form 1099-R won't be available until 2023.

I tried to enter that recharacterization into TurboTax 2021, but it then asks me for the info on form 1099-R, which I don't have.

What should I do?

Best answer by FangxiaL

Here is what IRS says about recharacterization:

If you recharacterized your original Roth IRA contribution to Traditional IRA, it is treated that you only contributed to the Traditional IRA. So, do not enter the Roth IRA contribution in TurboTax, enter $3,000 for the Traditional IRA. Form 8606 will show that you have a basis in Traditional IRA of $3,000, ignore the losses.

@ThomasM125 is correct.

2021 Instructions for Form 8606. See page 4 for more details regarding recharacterization.

Here is a paragraph from IRS Instructions for Form 8606 regarding recharacterization:

@4908517

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ThomasM125

You just need to report a traditional IRA contribution in 2021 if you had the recharacterization apply to 2021. You will get a 1099-R in 2023 for 2022 but it won't show any taxable income since your didn't make any money on the funds contributed. It also won't show the IRA distribution as being taxable since it is from a ROTH IRA. So, you report the form 1099-R on next year's tax return but it won't affect anything.

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Anonymous

Thanks.

Just to clarify: The $3000 contribution to Roth IRA become only $2886 when being transferred to Traditional IRA. So are you suggesting me to:

1. Not report the $3000 contribution to Roth IRA. Only report $2886 contribution to Traditional IRA.

2. Report $3000 contribution to Roth IRA. Also report $2886 contribution to Traditional IRA.

If I follow #2, my total contribution to all IRA for 2021 will exceed $6000 (due to other contributions to Traditional IRA that I made for 2021) and I think TurboTax will make me pay the fine.

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