I have maxed out my Roth IRA contribution this year (2021) not knowing there was a limit due to my income. To put it simply, I only qualify for $5k and I put in $6K. The IRA has now grown to about $8k and therefore I am left with $1333 (excess contribution and its corresponding growth). What is the best option to fix this tax free ?
Should I recharacterize the $1333 to a traditional IRA, and reconvert back to a Roth right away ? Is this possible ? is it tax free ?
Leave it in the account, and suck up the 6% tax on the excess next year 2022 ? (if this is the best option, please explain how to count the excess from 2021 towards 2022)
Thank you. Please provide me with the best tax-free approach to fixing this before the deadline (December 2021 or April 2022 ?)