5

I accidentally over contributed $25 to my traditional IRA last year giving a total non-deductible contribution of $5025. This was then converted along with all my traditional IRAs into Roth IRAs in 2010.

Can I make a 2011 contribution of $25 to my traditional IRA (so it no longer has a zero balance) and use that to fund the removal of excess $25 contribution from 2010? Or must I instead back out the Roth conversion via a recharacterization in order to fund the removal of excess contribution?

7

I'd call the IRS to be sure. but if you can unwind this before your taxes are due you won't owe the 6% tax on your excess contribution.

Here's the IRS page with this information. (Under Excess Contribution Tax.) I couldn't find a direct answer to your question.

If this is impractical then you can also (I believe) contribute $25 less than you're allowed to in 2011 to the appropriate IRA, and you're clean. You will owe an extra $1.50 in taxes, though.

But call the IRS. They've been very helpful to me the times I've called.

3

Two steps - paperwork to recharacterize the $25 to traditional, then withdraw that $25.

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