This last calendar year (2018) I opened up a traditional IRA and contributed $5500. However I did not do all my homework and discovered, after the fact, that money is only tax deductible if I don't participate in a employer sponsored retirement program (I currently max out my contribution to a 401k).

Overall this doesn't bother me, but since I've paid taxes on the $5500 already I'd like to put it into a Roth IRA and not incur any further tax penalties. Is there any way to recover this money without having to pay taxes twice?

  • 1
    Unless you have already filed your 2018 tax return, you haven't yet paid taxes on the money that you contributed to your IRA. Jan 22, 2019 at 19:34
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    @DilipSarwate that's also basically not true. Whether the returns have been filed or not, one still has either had withholding tax taken out of it before being in a paycheck or tax payments have been made in another way such as quarterly payments. Either way money contributed to an traditional IRA that is not deductible or a Roth IRA is considered after-tax, i.e. the taxes have been paid on it. That's true even if the quarterly payment hasn't been made yet.
    – T. M.
    Jan 22, 2019 at 20:34
  • @T.M. Any money that is contributed to an IRA (and only cash contributions are allowed) must be coming from money that the contributor already has "in his ;pocket" and is thus money on which tax has already been withheld (e.g. take- home pay) or paid via estimated tax payments but what the actual tax that is due depends on what the tax return shows. So, until the tax return has been filed and accepted, one has no way of saying definitively whether that $5500 came from pretax income or post-tax income. Jan 22, 2019 at 20:49

3 Answers 3


You want to do what's called a recharacterization of your 2018 Traditional IRA contribution to Roth IRA. Contact your brokerage and they should be able to handle it for you. You will get a Form 1099-R reporting this, but basically it will be like you had originally contributed to a Roth IRA.

The reason why you'd do this instead of a conversion (T. M.'s answer) is with a conversion you'd pay regular income tax on the gains (if any; in your case it will be the account balance minus $5500). This of course assumes your income is eligible to make a direct contribution to a Roth IRA (those limits are shown here). If you're above those limits, then it gets more complicated but conversion may be the way to go.

  • incorrect; you only pay income tax on the conversion if it was pre-tax money. if it was already taxed, the conversion is tax-neutral
    – Aganju
    Jan 23, 2019 at 17:12
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    @aganju no, Craig is correct. Even if the contribution to the Ira is with “after tax” money the growth in the account from the time of contribution to conversion would be taxable income. The $5500 wouldn’t be taxable, the growth above the $5500 basis would.
    – T. M.
    Jan 23, 2019 at 17:27

You don't need to recover the money, this can be solved simply by doing a Roth conversion. Most places that handle IRAs can do them easily. Contact your IRA custodian and ask to convert the IRA to a Roth. You'll have taxable income on any balance above your $5500 basis in the account, but that should be minimal.

Many IRA custodians with online access you can simply log into your account and do the roth converstion yourself.

Edit: @craigw is correct, if your income is within the Roth contribution limits, a recharacterization is the better option if the account value is above $5500. I forgot the new tax law eliminated recharacterizations only for previous conversions.

  • @DilipSarwate Since 2005, there are no income limits on Roth conversions. This is what allows the backdoor Roth strategy.
    – T. M.
    Jan 22, 2019 at 19:43

In addition to the above answers, per publication 590-A you can withdraw "Excess Contribution" amounts in a timely fashion (within 6 months of your filing due date). You will have to pay taxes on any earnings on the excess contribution amount but you can "recover" the money safely.

  • But it's not an "excess contribution". $5500 is the annual limit for IRA contributions, and there is no income limits for contributing to a Traditional IRA, so it cannot be "excess".
    – user102008
    Jan 23, 2019 at 17:08
  • An "excess contribution" can even be an unintentional one where it's perfectly legal
    – sedavidw
    Feb 13, 2019 at 2:20

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