ornery client/broker - what to do?

[DANRVAN]

18 hours ago, WITAXLADY said:

not changing to as Roth - abut a back door Roth - does that make a difference?

 

Your post are a little confusing but I think I now understand your situation.

Your client made a Roth contribution but income level was to high, so it was recharacterized to a nondeductible traditional IRA.

Let's say for example the contribution was $6,000.

Your client can now do a back door Roth by moving the $6,000 to a roth by a rollover or trustee to trustee transfer.  That would be an irrevocable conversion once completed.

If your client has made tax free traditional contributions he is subject to tax on the conversion due to the pro-rata rule.

 

[Lion EA]

Did he make a Roth contributions for 2020, but his income is too high? He should take it out. If not, does Form 5329 cover this situation?

(Still waiting for what my guy's doing with his SEP contribution without any earned income, so I can complete their 2020 returns. He says Fidelity is fixing it for him. I told him to send me Fidelity's documents when it's done.)

[DANRVAN]

3 hours ago, Lion EA said:

Did he make a Roth contributions for 2020, but his income is too high? He should take it out.

As I understand her post, the Roth contribution was recharacterized as a nondeductible traditional contribution.   In that case, the original contribution is treated as going to the nondeductible traditional as if the roth contribution never happened.

[WITAXLADY]

right - but his agent does not want to do that - so he is now calling Thrivent to talk to him,, I did not charge for this and he already paid - another charge?

 

thnak you all

D

[Hahn1040]

If he converts the Traditional IRA to ROTH, it will be reported on the 2021 return because that is when it was done.

The recharacterization is reported on the 2020 return:  nondeductible contribution reported on form 8606 and the statement explaining the recharacterization on a worksheet for the 8606.  It is for the 2020 contribution.  After recharacterization, the contribution is considered to have been contributed to the traditional IRA .

but a conversion would be reported in the year it was converted.

[WITAXLADY]

He left it as a non deductible Trad and filing 8606..

Thank you all!

D