contribute to traditional ira/rollover account in error

Submitted by C Yeh on Wed, 2013-11-13 02:51

I just realized that last year, my contributions were deposited in my traditional/rollover IRA account. It is still happening this year. They were suppose to be in a Roth IRA. My taxes last year did not take into account for this. I’m not sure what to do. Can I move it over to a Roth IRA? If so, are there any penalties and will I be taxed again? Should I and could I just take the tax deduction? What do I do with last year’s tax return? How do I handle this year’s? I greatly appreciate any help. Thank you.



Submitted by Alan - IRA critic on Wed, 2013-11-13 03:23

  • It is too late to change your 2012 contribution now. You have a TIRA contribution and if you can deduct it, you can amend your 2012 return to take the deduction. If you cannot deduct it due to income limits, then you can send in a stand alone Form 8606 for 2012 reporting your non deductible contribution. That will eliminate double taxation in the future, but you will be subject to the pro rate rules of Form 8606 when you take distributions.
  • Your 2013 contributions can still be recharacterized as Roth contributions and transferred out of your TIRA to your Roth IRA. To do this contact your TIRA custodian and ask to have your 2013 contributions recharacterized. Any earnings on your contributions will also go to your Roth IRA.

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