Recharacterized IRA

[JDW]

Client recharacterized a 2015 Roth IRA to a 2015 Traditional IRA. This was done March 2016 before filing their 2015 Tax Return. Intent was to recharacterized 2015 Roth to 2015 Traditional. They took the 2015 Traditional IRA as a deduction on their 2015 Tax Return. From their Investment Provider they received a 2015 Form 5498 for the Roth and a 2016 Form 5498 for the Traditional plus a 2016 1099-R showing the recharacterized amount and earnings with a R code. Are the tax forms they received correct? They did not received a revised 2015 Form 5498 for the Traditional IRA. This is the first time I have seen a recharacterized IRA and appears the amount was moved to 2016 instead of 2015.

Thank you for your input!

John

[Rapid Robert]

From their Investment Provider they received a 2015 Form 5498 for the Roth and a 2016 Form 5498 for the Traditional plus a 2016 1099-R showing the recharacterized amount and earnings with a R code. Are the tax forms they received correct?

Yes. See instructions for Forms 1099-R and 5498.

For what to report on the tax return, see instructions for Form 8606, which discuss this specific situation. Basically, you have to attach a statement to the return explaining what happened. My software produces an IRA worksheet that I find very helpful to include with my statement.

[JDW]

Thank you Robert for your assistance.

Yes. See instructions for Forms 1099-R and 5498.

For what to report on the tax return, see instructions for Form 8606, which discuss this specific situation. Basically, you have to attach a statement to the return explaining what happened. My software produces an IRA worksheet that I find very helpful to include with my statement.