Double Recharacterization

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  • #1345

    Hi All,

    I believe I made an error with a re-characterization and not really sure how to fix. Here’s the timeline.

    -Made accidental 2017 rIRA contribution of $600 in March 2017 (was over income limit in 2017)
    -Re-characterized contribution with earnings a week or so later to tIRA.
    -Contributed the max for the rest of the year.

    If i stopped here I think would have been OK. Here’s where things get messy:

    -Fast forward to January of 2018 when I went to start looking to file taxes and I realized I had an illegal Roth contribution and somehow totally forgot I already took care of it the previous March. 😳

    Re-characterized the same contribution from the Roth with earnings to the traditional IRA. (Looking back I would have thought Troweprice would have stopped me from doing this but apparently not).

    Called Trowe price and we decided that we should just re-characterize the traditional IRA re-characterization back into the roth.

    I do not believe what I did was right and I’m assuming I’ll be getting some really strange 1099-R forms this year, looking for some guidance on how to account for this all. Trying to plan way in advance since I’m not a Trowe price customer any longer and that will probably make it even more complicated.

    As a sidenote I will also be over the income limit for 2018 Roth contributions. I was also planning on doing a backdoor Roth this year.

    Any and all help would be much appreciated.

    Alan S.

    I posted some questions on the other site where you posted this. Need to have you clarify those questions before responding further in order determine exactly what TRP has done. Note that if TRP actually processed a disallowed recharacterization, how they would correct that or report that is unpredictable, but something that you need to have clarified by them. For example, it is not possible to re recharacterize and already recharacterized contribution, but if you made Roth contributions in addition to the $600, the fact that the $600 was recharacterized does not prevent you from recharacterizing the additional Roth contributions to TIRA. To be sure what actually happened, please clarify the questions asked on the other site.

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