Backdoor Roth IRA contribution

Submitted by michael steinebach on Wed, 2023-01-11 20:11

Client made a contribution for 2022 Roth IRA. October of 2022, for $3,000.

Client joint income is well above $214,000. Can’t contribute to a Roth.

Can I recharacterize the contribution to a traditional IRA contribution? We can backdoor it, so this would be a recharacterization to a non-deductible traditional ira.

In summary, we would recharacterize the 3K contribution to traditional IRA contribution. Then, contribute an additional 3K in 2023 (for the tax year 2022). The convert the entire account (6K) in 2023.



Submitted by Alan - IRA critic on Wed, 2023-01-11 20:34

You can do that, but it only works well if client has no non Roth IRA balance except for the recharacterized contribution. 

Submitted by michael steinebach on Wed, 2023-01-11 20:41

Client only has a 401(k), Roth IRA, and will have non-deductible IRA if we recharacterize.   Any other options?  

Submitted by Alan - IRA critic on Wed, 2023-01-11 20:46

Then the conversion will be non taxable except to the extent that there are any gains on the 3000 recharacterized contribution. 

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