Hi!!
Filling my taxes I realized I over limit my backdoor Roth IRA limit. Not sure what is the recommendation for this situation? I read i can withdraw the money from fidelity with a penalty but wondering if can cause issues with IRS.
Thanks!
Thank you for the question!
You did a backdoor Roth IRA for 2022 and contributed more than $6,000? You have a few options to avoid any form of penalties.
One option would be to work with Fidelity to re-characterize a portion of your contributions from 2022 to 2023. This gets a little tricker when doing a backdoor, but not impossible to do.
Another option is to withdraw the excess contributions, in addition to gains it has earned, by the April tax deadline. You then include the earnings portion in your taxable income for the year. I assume this is small or maybe even negative since last year was a down year.
If you haven’t already, check out our facebook group since there are a lot of Fidelity users who have been talking about similar things recently:
Thank you Shane!! Very kind to answer my question!
In theory turbotax says that i exceeded the allowed income to can contribute to the back door roth ira. I am little confused because in many places i read for high income you can use the backdoor Roth ira.
I will join the group and check those posts.
Thank you!
Oh interesting. There are no income limits to do a backdoor Roth IRA!
Sorry, my earlier answer was about if you contributed more than the max amount. I didn’t realize you were referring to income!
This PFC article lays everything out: