1099-R for recharacterized contribution?
I reopened an empty, dormant TIRA account by making a contribution in 2020. Shortly thereafter, I converted the entire contribution to a newly opened Roth account at the same broker. Should I have received a 1099-R for the recharacterization? TurboTax seems to charge me for the income on the 1099-R but not credit the inititial deduction.
If (as a workaround) I tell TurboTax I did NOT recharacterize the contribution, it responds that I make too much money to have made the contribution in the first place.
In box 2a, eTrade’s 1099-R says that the entire sum was taxable; 2b says that the taxable amount was not determined.
Thanks for your help.
Permalink Submitted by David Mertz on Tue, 2021-02-16 20:17
You appear to be confusing conversion with recharacterization. These are two different types of transactions. If your modified AGI is too high to make a regular Roth IRA contribution, it seems that your intent was to make a traditional IRA contribution and then *convert* (not recharacterize) to a Roth IRA.
The fact that the Form 1099-R that you received has the same amount in box 2a as in box 1 supports the presumption that you did a conversion, not a recharacterization.
Your tax software is probably telling you that you made to much to be able to *deduct* the contribution. There is no income limit above which would make you ineligible to contribute to a traditional IRA.
Because you made a nondeductible contribution, the taxable amount is determined on Form 8606, which should be prepared automatically by your tax software. If that’s not happening, I suggest that you post a question about it on the user support forum for your tax software.