Ineligible Roth Contribution
Client wanted to make a non-deductible IRA contribution in 2015 (not made until April of 2016) that would later be converted to Roth. There was a clerical error and the contribution was actually made directly to the Roth, which this client cannot do. The tax return and 8606 were filed correctly. My question is when we do the corrective distribution will the client still be able to make the ND-IRA contribution for 2015?
Thanks in advance
Nick
Permalink Submitted by Alan - IRA critic on Wed, 2016-06-01 19:31
It is too late for a new 2015 contribution. However, the Roth contribution can simply be recharacterized as a 2015 TIRA contribution. There should be no corrective distribution. The 1099R reporting the recharacterization will be issued in January, but coded to apply to the 2015 tax year.