Tax Planning:
Q: Is it permissible to convert a traditional IRA to a ROTH IRA in 2024, even though sole funding for the traditional IRA was from a recharacterization of 2023 ROTH contribution that occurred in early 2024?
If yes, is this a difficult process to report through turbo tax? I am concerned this will be difficult to report correctly through tax software.
Reasoning: Estimated 2024 income (marginal rate 12%) will be lower than 2023 income (marginal rate 24%) and lower than foreseeable future marginal tax rates.
Background:
In 2023, a ROTH contribution was made. During early 2024, the ROTH contribution was recharacterized to a traditional IRA contribution. The recharacterized contribution was reported on 2023 taxes and the deduction was used.
In early 2025, a 1099 R is expected from brokerage to report the recharacterization that occurred in 2024. I don't believe there will be any impact to taxable income for this 1099 R for 2024.
Appreciate any insight.
Q: Is it permissible to convert a traditional IRA to a ROTH IRA in 2024, even though sole funding for the traditional IRA was from a recharacterization of 2023 ROTH contribution that occurred in early 2024?
If yes, is this a difficult process to report through turbo tax? I am concerned this will be difficult to report correctly through tax software.
Reasoning: Estimated 2024 income (marginal rate 12%) will be lower than 2023 income (marginal rate 24%) and lower than foreseeable future marginal tax rates.
Background:
In 2023, a ROTH contribution was made. During early 2024, the ROTH contribution was recharacterized to a traditional IRA contribution. The recharacterized contribution was reported on 2023 taxes and the deduction was used.
In early 2025, a 1099 R is expected from brokerage to report the recharacterization that occurred in 2024. I don't believe there will be any impact to taxable income for this 1099 R for 2024.
Appreciate any insight.
Statistics: Posted by LFT_PFT — Sun Aug 04, 2024 11:29 pm — Replies 1 — Views 216