My Maximum IRA Contribution Meant for Tax Year 2021 Was Somehow Miscoded For Tax Year 2022

Submitted by Kelly Duke on Tue, 2023-03-21 23:40

The transaction was made in March of 2022.

I did not notice this error until I went to make my 2022 tax year contribution recently, and my account said that I had already maxxed out my 2022 contribution.

I sent JP Morgan a Letter of Authorization to change the tax year in their system, but they replied that they have an arbitrary policy to make those corrections only for the current and previous calendar year.

Can I get a tax attorney to force JP Morgan to make this correction?

If not, do I have any options to correct this mistake with the IRS?

I cannot believe that there is no way to correct this simple (and I am pretty sure now very common) error considering that I actually transferred the money into my IRA well before the deadline for tax year 2021. I just need to get the transaction credited to the correct tax year.

And before you tell me that April 15th, 2021 was the IRS deadline for “recharacterizing” my contribution, that regulation is about changing from a regular IRA to a Roth IRA. In fact, JP Morgan informed me that their policy (not the IRS’s) was that the deadline to make 2021 tax year corrections was December 31, 2022.

Why can’t a contribution year be corrected indefinitely if the transaction was made in good faith by the appropriate date and it did not exceed the limit allowed by law? If this is not allowed by the IRS, where is the IRS policy that states that this is not allowed?

Thanks.



Submitted by Alan - IRA critic on Wed, 2023-03-22 01:11

  • The IRS allows the contribution year to be changed to a former year only while the contribution would still be timely, in other words this had to be done by 4/15/2022 in order to be reported as a 2021 contribution on Form 5498. For a mere 6000, I certainly would not incur legal fees when the chance of success is close to 0, unless perhaps you have clear documentation that the custodian incorrectly applied your contribution to 2022 (for example if your contribution check was tabbed either “2021 contribution” or “prior year contribution”.
  • Recharacterization would not have changed the year of contribution if done by the deadline, it would only change it to a Roth contribution as you indicated.  As for the deadline to make certain changes to 2021 contributions being 12/31/2022, it’s really 10/15/2022 which is the deadline to either recharacterize or remove a 2021 contribution. Exceptions may apply for natural disasters, military overseas etc.
  • You are correct that this happens frequently for contributions in the gap period of 1/1 to 4/15 when contributions could be for either the current or prior year. That’s why taxpayers need to verify right after the contribution that it was assigned correctly.
  • If you took a deduction on your 2021 return for this contribution, you will have to amend it to remove the deduction, and I imagine that’s the main source of irritation. If you are unhappy with JPM, you also have the option of requesting the return of the 2022 contribution. In the last year the value of your contribution has likely declined, so you would get less than you contributed. But you could then make a new 2022 full limit contribution before 4/18/23 with another custodian if you wanted to, but there is no real solution to your main concern which I assume is the amended 2021 return and the loss of 2021 contribution space.
  • I have not heard of any IRA custodian simply correcting a contribution year after it was no longer timely except when the error is entirely their fault, meaning 100% their fault. Even then they would have to amend any  incorrect 5498 they filed with the IRS. Unfortunately, I have never seen an IRS reg or publication that addresses this type of reclassification one way or other, ie what is permitted or not permitted.

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