Thanks for reply. Looks like first I have to pay tax on $6500 ROTH contribution due to pro-rated rule and then again tax on same amount due to early withdraw. basically double tax on same amount and net result is zero.
As u see my contribution was non-deductible and taxed already. Let me know if any solution. please suggest.
As u see my contribution was non-deductible and taxed already. Let me know if any solution. please suggest.
Yes, you need to report the 2023 Form 1099-R distribution of $6,500 on your 2023 Form 1040. The majority of the $6,500 is taxable (the amount will be calculated on Form 8606).… I do not quality for deductible IRA contribution due to my income hence I tried to use backdoor IRA Roth conversion.
I contributed non-deducible $6500 in Dec 12 2023 in IRA and few days later converted to Roth IRA. But week later I found from a forum that partial conversion may cause problems since I have other IRA account with 30K balance so I withdrawal amount from Roth IRA immediately and moved to my bank. From opening to IRA account and withdrawal from Roth IRA was done within 15 days in Dec 2023.
Now I have received 1099-R form my brokerage. I wanted to understand if there is any tax consequence due to above transaction. Do I need to pay any taxes. There is no income form amount I contributed. Please help !
Withdrawing the $6,500 from the Roth IRA did nothing to resolve the pro-rated taxes you owe on the $6,500 Roth conversion you did. As you had a 12/31/23 pretax TIRA balance of $30k, the majority of the $6,500 converted is subject to income tax. If you wanted to avoid taxes on the $6,500 conversion you needed to zero out the pretax TIRA by 12/31/23 by either withdrawing the TIRA funds (taxable) or converting the $30k to Roth (taxable) or rolling the $30k into a qualified benefit plan such as a 401k (not taxable).
Statistics: Posted by tigerp — Wed Mar 06, 2024 9:40 pm