Error in contributing to Roth IRA
In 2022 I contributed to an existing Roth IRA before realizing that my income exceeded the maximum income eligible fora contribution. How do I reverse this contribution and put it in a traditional IRA Account before I file my taxes. Merrill Edge won’t reverse it with verbal instructions. Thank you.
Permalink Submitted by Alan - IRA critic on Wed, 2023-04-05 00:04
You can ask them to recharacterize the Roth contribution as a traditional IRA contribution, but it likely will not be deductible. You would then file Form 8606 with your 2022 return showing the contribution as non deductible. If you have no other traditional IRA balance, you could then convert the TIRA to Roth tax free except if the recharacterization included some gains. That is not likely given the bad markets since the start of 2022. Note that a recharacterization is a one step transfer that avoids a distribution and recontribution by you before 4/18. Not sure if ME will require you to complete a form to do the recharacterization. You could still file your return with an explanatory statement regarding the excess contribution and recharacterization as long as you intend to complete the recharacterization, the deadline for which is 10/15 provided that you either file your return by 4/18 or file an extension. You will have to make some timing decisions very soon.
Permalink Submitted by Andrew Zahn on Wed, 2023-04-05 16:08
Thank you.