Question

Roth recharacterization

Forum|Forum|1 year ago
February 23, 2025
1 reply
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I am 65 years old. Near the end of 2023, I contributed to my Roth, but when I did my 2023 taxes in early 2024 I discovered that my income was over the allowable limit. I called my brokerage, and they recharacterized the Roth contribution to my IRA well before the filing deadline. This year, I received a 1099-R for the amount recharacterized, an amount TurboTax added to my yearly retirement withdrawals. I don't understand why this Roth recharacterized would be taxed: It was after-tax dollars that were deposited in the Roth so I am confused why these dollars would have generated a taxable event when recharacterized. Can anyone give me guidance on this?

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willisgeol2Author

To answer my own post, on looking in more detail, the 1099-R lists the amount recharacterized, but line 2a indicates that the tax on this money is zero, so in reality, the 1099-R form does nothing. It was confusing, however, that TurboTax listed it in the initial income summary as a pension withdrawal (when it was not an "income tax" generating withdrawal on the final paperwork). So that issue is now settled (for me at least).