Line 6 includes amounts recharacterized after December 31, but only if those amounts were originally contributed before December 31.Using a likely more correct interpretation of the "However, if you recharacterized any amounts originally contributed, enter on line 6 the total value, taking into account all recharacterizations of those amounts, including recharacterizations made after December 31" part of the instructions for line 6 to apply only to recharacterization from traditional IRAs, line 6 should be the balance in traditional IRAs as of December 31, 2023, without adjustments due to recharacterizations to traditional IRAs after December 31, 2023.Here's a simple exercise:
In 2022, you make a $7,000 non-deductible IRA contribution and leave it uninvested. In 2023, you convert the $7,000 to Roth. In January 2024, you make a Roth contribution of $7,000 designated for 2023 and immediately recharacterize it to traditional. Your income was too high. What goes on line 6 of your 2023 form 8606?
If you work through the example I described, you would see that including the recharacterization of the contribution would result in half of the conversion being taxable, an obviously erroneous consequence. However, as Alan explained in the thread FiveK linked above, a contribution to Roth made in 2023 but recharacterized in 2024 would be included on line 6. This makes perfect sense in the context of treating the contribution as if it had been made to the destination IRA in the first place.
Applying this to OP's situation, which I will quote here for clarity:
The $6,600 contributed to the Roth IRA during calendar year 2020 for tax year 2020 should be included on the 2020 form 8606 line 6 including earnings associated with that contribution.2019: $7000 contributions to Roth (all from Jan-Dec 19)
6/22/20: rechar $7585 (7000+gains) to trad IRA
6/24/20: Converted $7515 (entire trad IRA) back to Roth IRA
Throughout 2020: Contributed $6600 to Roth IRA
Jan21-Apr21: contributed additional $400 to Roth
5/3/21: recharacterized $8600 ($7000+gains) to trad IRA
5/5/21: Converted $8626 (entire trad IRA) back to Roth IRA
The $400 contributed to the Roth IRA in calendar year 2021 for tax year 2020 should not be included on the 2020 form 8606 line 6, logically including earnings associated with that contribution.
Statistics: Posted by toddthebod — Wed Sep 18, 2024 10:50 pm