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Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: Gone Fishing on March 10, 2015, 02:17:41 PM

Title: Need IRA related tax help-did I screw up?
Post by: Gone Fishing on March 10, 2015, 02:17:41 PM

So I funded my ROTH early last year (2014 contribution in 2014).  After learning about the IRA ladder I decided to recharacterize my contribution in December and moved the contribution into an existing IRA (dumb I know, I could have waited until I actually did my taxes) as I projected my income to be below the deductible threshold.  Well it turns out that it will not be deductible due to some last minute extra income.  Can I just undo the recharacterization?  I can not seem to find any information about this.  Or would it just be a conversion at this point? If so, would the pro-rata rules apply like a back door ROTH as my IRA would have 90% deductible and 10% non-deductible contributions at this point. If so, I guess I could just leave it in place and increase my IRA ladder accordingly?   

Title: Re: Need IRA related tax help-did I screw up?
Post by: Gone Fishing on March 11, 2015, 01:37:55 PM

So I think I can still withdraw the contribution before 4/15, pay the early withdrawal penalty and taxes on any gains (which I think I would prefer to having non-deductible contributions co-mingled with deductible), then make a "new" contribution to my ROTH.

Any thoughts?