Hi All-
I have an issue with my Roth accounts that I have been researching on how to correct. I have an idea of what needs to be done but would appreciate any other information the mustachian experts can direct to towards.
The situation I have going on is that I have funded the wife's and my Roth IRAs earlier this year. Hers was a one-shot max contribution in January and mine was gradual until the middle of the year where I contributed the remainder to max it out. The problem herein is that I have exceeded the MAGI limits for contributions into a Roth to where I am not eligible to contribute at all. I knew I would be close to the limit but some extra compensation came my way towards the end of the year. A good problem to have but I have definitely procrastinated on correcting this. My wife is mostly holds down the fort and helps out with the school a little bit - not much extra income to be considered.
From what I understand Ill need to withdraw the funds from both Roth accounts and move them into a Traditional IRA account as non-deductible contributions. What Im unsure of is how exactly do this as efficiently as possible..... Can this can simply be a withdrawal of the $6k per account and deposit into the T-IRA, or do the gains on this years contributions needs to be withdrawn as well (and how to heck is that calculated), or does this need to be a different type of movement of funds such as a recharacterization of the Roth funds into T-IRA?
On top of this, once the funds are in the T-IRA would I be able to do a backdoor Roth conversion of the funds to get them back into the Roth?
Any insight on how to handle this situation would be very much appreciated. Ive been researching it quite a bit but its not very clear [to me] on how to handle this exactly.
Thanks!
