Roth contribution recharacterization in error

Technical topics regarding tax preparation.
#1
JoJoCPA  
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560
Joined:
1-Sep-2019 2:57pm
Location:
Massachusetts
We just discovered that in 2018, my client contributed $5,500 to a traditional IRA then intended to immediately convert the contribution to his Roth IRA like he always does every year. Instead, he checked the wrong box on the Fidelity website and the traditional IRA contribution was “recharacterizated” as a Roth IRA contribution. He made too much money for direct Roth IRA contribution. Now he has an excess contribution for two years and is facing a two year penalty. Any suggestions to not pay the penalty? Based on history and past Roth conversions, his intention was not to do the recharacterization. Do you think it would work to file the 5329 and ask for a penalty waiver? The result is the same. The money is in the Roth. Just got there using a different word.
 

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