Reply To: 2021 IRA

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Alan S.

In that case, she should recharacterize the ND contribution as a 2021 Roth contribution. Since a recharacterization results in the contribution being treated as if it was a Roth contribution all along, any gains on that contribution become Roth gains. She has until 10/15/2022 to recharacterize the 2021 contribution if she either files her return by 4/15/2022 or files an extension by 4/15.

If there was a loss on her contribution, instead of recharacterizing it she could request a return of contribution, and would receive her contribution less any loss. There would be no tax and penalty on this. She could then make a new Roth contribution of the full amount replacing the lost dollars. Of course, this is two steps instead of one.