I have (what appears to be) a rather challenging situation involving failed backdoor Roth IRA contributions. At a high level, there were excess contributions for the previous tax year, and last year there was an incomplete Roth conversion.
Facts:
- The current year is 2020, and am filing taxes for 2019
- In 2018, my spouse opened both a Traditional IRA and Roth IRA with provider "A" with the idea to do a backdoor Roth contribution.
- $5,500 was contributed to the Traditional IRA for tax year 2018
- The money was never converted to Roth
- By Feb 2020, there was roughly $8,200 in the Traditional IRA
- In 2019, my spouse opened both a Traditional IRA and Roth IRA with provider "B" with the idea to do a backdoor Roth contribution (the existence of the account with provider "A" was forgotten about)
- $6,000 was contributed to the Traditional IRA for tax year 2019
- $5,500 was contributed to the Traditional IRA for tax year 2018
- The $11,500 was immediately converted to Roth (in 2019)
- In early 2020, the presence of provider "A" was remembered, and the money in the Traditional IRA was converted to Roth
Net Result of Above Facts:
- I have an excess IRA contribution for tax year 2018
- The Roth conversion in 2019 was done in two steps 1 year apart (one in 2019, another in 2020 but intended for tax year 2019 if that is possible)
Questions:
I believe I know what do to (withdraw or carry forward excess contribution and pay penalty and taxes pay tax on earnings in Traditional IRA after the conversion, possibly pay a penalty for not converting all Traditional IRA dollars at once), but I do not know how to do this. There are plenty of guides online for one of these issues in isolation, but there is no blog post "So you really screwed up your IRA" with instructions for handle all of these in union.
How can one address this in as few steps as possible, and correctly report the problem and solution on their tax forms?