Roth Contribution but Ineligible Question
Client makes a 2018 Roth contribution in January 2019, but when he does his taxes finds out he had too much earned income to make ANY contribution. Client processes a “return of excess contribution”, and funds are returned to his bank account. Client does not have a traditional IRA, so client inquires about a back door Roth. Is there any IRS rule that says once you process a “return of excess contribution”, you are now ineligible to make a new contribution for 2018 (because the contribution was done already)?
Permalink Submitted by Alan - IRA critic on Tue, 2019-04-09 19:41
No such rule. Client can make the non deductible TIRA contribution by 4/15 and convert it right away. However, a 2018 8606 will have to be filed to report the non deductible contribution. Note that any gains returned with the Roth excess will be taxable in 2019 because that is the year IN WHICH the contribution was made.