2022 contribution originally designated as being FOR 2021

Submitted by Carol Redd on Fri, 2023-06-16 18:25

On 8/31/21 I made a contribution to my Traditional IRA at Fidelity for $1,100
On 4/15/22 I made a $7,000 contribution at my local credit union and requested it be FOR 2021
In preparing my 2021 tax return, I claimed $7,000 as a contribution
In preparing my 2022 tax return, I discovered that I should have requested only $5,900 be FOR 2021 and the $1,100 should have been attributed to 2022.

Is my 2022 contribution still in the “toolbox” so I can complete a form and make this change? If so, what form do I use to avoid what appears on the surface to be an EXCESS contribution of $1,100 and instead receive a corrected Form 5498 listing it as $5,900 for 2021 and $1,100 for 2022?



Submitted by David Mertz on Fri, 2023-06-16 20:13

  • You have a $1,100 excess contribution for 2021 and the October 17, 2022 deadline to correct that for 2021 has passed.  You must report the excess contribution and pay the $66 excess-contribution penalty for 2021 by filing 2021 Form 5329.
  • If your contributions designated for 2022 are no more than $5,900 and you have sufficient 2022 compensation to support a full $7,000 of contribution for 2022, you can apply the $1,100 excess carried in from 2021 as part of your 2022 contribution.  This will be shown on your 2022 Form 5329.

Submitted by Carol Redd on Mon, 2023-06-19 18:40

The 2022 Form 5498 supposedly has already been issued showing the $5K contributed on 4/18/23, but requested to be classified as for 2022.  I have requested the fcu recode this as being for 2023.  It is unlikely that they will even attempt to do this, but I would like to know WHERE it is written that the request cannot be changed while it is still within the reporting period for filing the tax return for 2022.

Submitted by David Mertz on Mon, 2023-06-19 19:55

  • This is your first mention of having made a contribution for 2022.  Why do you want to change anything about this contribution made on 4/18/2023?  Since it’s apparently less than or equal to $5,900, you can keep this contribution as a 2022 contribution and just apply the $1,100 excess carried in from 2021 as the other part of your 2022 contribution.
  • “I have requested the fcu recode this as being for 2023.”
  • The deadline to reclassify the year for which the 4/18/2023 contribution was made was made is the IRA *contribution* deadline, which is the *regular* due date of your 2022 tax return.  With regard to this contribution, the IRA contribution deadline has already passed unless you are in a disaster area that has had the regular 2022 filing deadline changed to October 16, 2023.  Assuming that you are not in such an area, the FCU should deny the request to reclassify and should not change the 2022 Form 5498.
  • If you filed your 2022 tax return or requested a filing extension by April 18, 2023, you do have until October 16, 2023 to request a *return* of some or all of your 2022 contribution.  However, the distribution for a return of contribution is required to be adjusted for any investment gain or loss, which is different than what would happen if you could reclassify the year of the contribution.  Even if you use the distributed funds to make a 2023 contribution, this would not constitute reclassifying the year of the contribution.

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