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Roth/IRA Contribution

Technical topics regarding tax preparation.
#1
AnitaL  
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82
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27-Jun-2014 10:40am
Location:
Wilmington, NC
HI!
Client made a 2018 contribution on 12/31 to a ROTH/IRA($5000) and to a regular IRA($5500).

What would be the easiest way to get that ROTH/IRA re-characterized as 2019 contribution.

From what I can tell, she can only contribute up to $5500 total for 2018 (she's not over 50). She needs the tax deduction for 2018 from the regular IRA.

I really appreciate your help!
 

#2
CrowCPA  
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233
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25-Apr-2014 3:27pm
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New England
Talk to the financial institution that holds the funds. They may be able and willing to change that for you. Edward Jones did that for a client of mine once about 20 years ago. Is it kosher? I don't know. But if they will do it, why not?
 

#3
HowardS  
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870
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Southern Pines, NC
You can't re-characterize. Have the client call his plan administrator and they can probably do a 2018 withdrawal/2019 contribution over the phone. Do the Roth.
I suffer from depreciation.
 

#4
AnitaL  
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82
Joined:
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Location:
Wilmington, NC
Hi, CrowCPA.
We did reach out to Fidelity. They are refusing to change it. Silly, right? The contribution was put in late in the day on 12/31 and wasn't even invested in anything...just the money market.
Maybe we should call and try to get a supervisor.
But, in case they just won't change it, should I have her withdraw it and then re-deposit it for 2019? I am worried about the tax ramifications.
 

#5
AnitaL  
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82
Joined:
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Location:
Wilmington, NC
Thanks, HowardS. We'll try that. Will it trigger 2018 tax/penalty? There were no earnings.
 

#6
HowardS  
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870
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Southern Pines, NC
You can withdraw by the tax filing deadline without incurring the 6% excise penalty. Some institutions are more cooperative than others.
https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/customer-service/IRA-return-excess-contribution-request.pdf
I suffer from depreciation.
 

#7
AnitaL  
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82
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Location:
Wilmington, NC
Thanks so much!
 

#8
lucyko  
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505
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27-Jul-2014 10:19pm
Location:
Orange County,CA
There will be no penalty on the withdrawal of the deductible IRA or the Roth IRA as long as you withdraw the excess contribution by April 15 ,2019.

Now your client faces the dilemma of which account to withdraw funds from ; the Traditional IRA or the Roth IRA . Without knowing all the facts such as client tax rate , client long term objectives ,does he /she have any Roth IRA's ,this is difficult to answer. However it appears that decision has already been made because you state she needs the deduction on the 2018 return .
 


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