Question

Roth IRA to Tranditional to Backdoor Roth

Forum|Forum|2 years ago
April 6, 2024
1 reply
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Hello,

I made the mistake of contributing the full amount to my Roth IRA at the beginning of the 2022 calendar year. Then when I went to file my taxes, I found out I went over the MAGI limit and needed to remove $4,740 from the Roth IRA. Over that 14 month period, the $4,740 grew to about $5,600. So I moved the excess ($4,740 + $860 earnings) into a traditional IRA. Then 3 days later did the backdoor Roth for the full amount (over the 3 days the $5,600 dropped to $5,504). So no problem for the 2022 taxes. Then during the year I put the full $6,500 into a Traditional IRA, and moved to Roth IRA right away. Now I am in the 2023 taxes and have two 1099-R forms. The Roth 1099-R ($5,600), and the Traditional 1099-R ($12,004).

After filling in the details into Turbotax, I am getting a taxable amount of $764 for the growth of the Roth excess contributions while in the Roth IRA. Is that accurate? Should I be taxed on the excess even while it was in the Roth?

D

DanaB27

Yes, this sounds correct. When you recharacterized the Roth contribution then the earnings are deemed to have been earned in the traditional IRA. You had a total basis of $11,240 and converted $12,004. Therefore, the earnings of $764 were taxable during the conversion.

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