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I have two retirement accounts at the same brokerage. One is a traditional IRA that was rolled over from a past company 401k plan, the second is a Roth IRA that I contribute to with taxable income.

I thought I would simplify my record keeping by converting the traditional IRA to the existing Roth IRA (first mistake?). I also elected to have the "default" amount of withholding tax deducted from the conversion (second mistake).

With respect to the second mistake, it seems the amount withheld for federal taxes was 25% and California state tax (10%) is higher than my effective tax rate. No problem, that money went to the IRS, and I should be able to apply the difference on my next year taxes... Correct?

Now for the bigger mistake (mistake 1) for which I am trying to correct. When I received the 1099-R form from my broker, it appears that the 1099-R gross distributions (box 1) and taxable amount (box 2a) total up to traditional IRA + Roth IRA balances. It is as if they took both accounts and created a new Roth IRA account. But this seems wrong because I would be taxed on the existing Roth IRA money (for which I already paid tax).

I think what I should have done was converted the traditional IRA to a new Roth IRA account and left the existing Roth IRA account alone. I have read posts about undoing the conversion, but none are specific to my situation where I converted with an existing Roth account.

How would I undo an IRA conversion if the new account has both pre-tax and post-tax funds?

  • Did you try calling them? If 1099 is wrong - there's nothing you should be undoing. They should fix it. – littleadv Apr 24 '15 at 1:23
  • I did call my broker and they told me to file a ticket online. Which I did before 4/15, and I have not heard back yet. Are you saying that the 1099 is wrong? – omencat Apr 24 '15 at 1:25
  • I don't know. It sounds like it is from what you described. You should have received separate 1099 for each account (or at least have a separate line if it is consolidated). – littleadv Apr 24 '15 at 1:27
  • the broker s/b be able to correct an erroneous 1099-R. Patience and prodding are your tools. – michael Apr 24 '15 at 12:47

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