I am 50+, my wife is not. We file jointly. We do not have existing (ongoing) Traditional IRA accounts since 2020.
In 2023, I made a $7167.44 Roth IRA contribution (with is under the $7500 limit for 50+), and my wife made a $6500 contribution to her Roth IRA.
While filing 2023 taxes before April 2024, we realized that we are ineligible to contribute to Roth IRAs, so we asked the custodian to convert both of ours entire 2023 contribution to a newly opened Traditional IRA for a recharacterization back to Roth (backdoor). My $7167.44 was $7916.65 at the time of TIRA conversion (gains of $749.21) and my wife's $6500 was $7839.12 at the time (gain of $1339.12)
On our respective (new) TIRA accounts, we contributed our *2024* IRA non-deductible contributions ($8000 for mine and $7000 for hers) and asked our custodian to recharacterize the full value in our TIRA (2023 contributions + gains on 2023 contributions + 2024 contributions) to our existing Roth IRAs respectively and close the TIRA accounts. All this happened before we filed our 2023 taxes.
When we filed our 2023 taxes in April 2024, we attached form 8606 for both of us, and filled out lines 1, 2, 3, 14 with our statement.
We are now filing our 2024 taxes and each of us got two 1099-Rs for what we did last year. The question is now this:
[1] How do we pay for the penalty and/or the taxes on the gains of our 2023 contributions
[2] Can the excess contribution (gains on the previous contribution) somehow be used as *2025* contribution? Or do we need to withdraw the amount from out Roth IRAs. We have not made any 2025 IRA contributions yet.
In 2023, I made a $7167.44 Roth IRA contribution (with is under the $7500 limit for 50+), and my wife made a $6500 contribution to her Roth IRA.
While filing 2023 taxes before April 2024, we realized that we are ineligible to contribute to Roth IRAs, so we asked the custodian to convert both of ours entire 2023 contribution to a newly opened Traditional IRA for a recharacterization back to Roth (backdoor). My $7167.44 was $7916.65 at the time of TIRA conversion (gains of $749.21) and my wife's $6500 was $7839.12 at the time (gain of $1339.12)
On our respective (new) TIRA accounts, we contributed our *2024* IRA non-deductible contributions ($8000 for mine and $7000 for hers) and asked our custodian to recharacterize the full value in our TIRA (2023 contributions + gains on 2023 contributions + 2024 contributions) to our existing Roth IRAs respectively and close the TIRA accounts. All this happened before we filed our 2023 taxes.
When we filed our 2023 taxes in April 2024, we attached form 8606 for both of us, and filled out lines 1, 2, 3, 14 with our statement.
We are now filing our 2024 taxes and each of us got two 1099-Rs for what we did last year. The question is now this:
[1] How do we pay for the penalty and/or the taxes on the gains of our 2023 contributions
[2] Can the excess contribution (gains on the previous contribution) somehow be used as *2025* contribution? Or do we need to withdraw the amount from out Roth IRAs. We have not made any 2025 IRA contributions yet.
Statistics: Posted by redhat27 — Mon Feb 24, 2025 1:47 am — Replies 0 — Views 49