Level 5

Excess Back door Roth Contribution

Forum|Forum|5 years ago
February 6, 2021
13 replies
78 views

Hi all

I have a client who did 2x back-door Roth contributions in 2020. He earns too much for regular Roth contributions, He contributed twice after tax to an IRA, then rolled $6k into a Roth in May, and $6k into a Roth in December,

I now have 2 x 1099's showing the distributions from the IRA's in 2020.

I can enter the 1 x $6000, and designate it as a back door to make it not taxable.

What do I do about the 2nd contribution made in Dec 2020, and the 2nd 1099.

Thanks for the help

Nolan Menachemson

This topic has been closed for replies.

qbteachmt

Level 15

"He contributed twice after tax to an IRA"

That's the question; was that Allowed or not? You had to qualify for this step.

The "backdoor" simply is a Conversion. The entire IRA (or even, all funds in all IRA) can be converted. There is no limit on conversion.

Don't yell at us; we're volunteers

N

nolanmAuthor

Level 5

ok, so he is limited to contributing $6k p.a. to an IRA. And he did 2x $6k = $12k.

So how do I treat the 2nd 1099 for $6k.

Everything I am reading says he has to withdraw the "excess" $6k before 4/15 to not incur a 6% penalty.

But will the plan administrator will only generate a 1099 showing the withdrawal from the Roth next year, as a 2021 action.

The question remains how do I treat the 2nd 1099 in his tax return for 2020?

qbteachmt

Level 15

"he has to withdraw the "excess""

It wasn't an Excess contribution to Roth; it was a conversion. A failed conversion, as in, not allowed; because the Traditional IRA contribution was excess.

I found this article for you:

https://www.thetaxadviser.com/issues/2020/apr/correcting-excess-contributions-iras.html

Don't yell at us; we're volunteers

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