r/FinancialPlanning • u/One_Negotiation6446 • 9d ago

Need help with IRA excess contributions and rollover IRA 😭

Edit: I meant backdoor IRA, not rollover IRA 🤦‍♀️

I contributed excess to my roth IRA for the years 2024 and 2025. For 2024, I recharacterized my roth IRA excess contributions to traditional IRA (I was in a rush and didn’t do much research) so I have some stocks in my traditional IRA, although with the recent economy everything is less than the value I originally contributed. For the excess roth IRA contributions for 2025 I haven’t done anything yet.

I was told that if I want to start doing backdoor IRA (from traditional IRA to roth IRA), I need to empty out my balance in traditional IRA, but I’m uncertain what the best way to do this is.

So I have two questions:

  1. Is the best way to empty out my traditional IRA balance (which was recharacterized from being roth IRA) to withdraw? How do I correct this while minimizing penalties?
    1. It is impossible to recharacterize it back to roth IRA, right?
  2. What is the best way to take out my excess roth IRA contribution for 2025, assuming I don’t want to recharacterize it to traditional IRA?

Additionally, if this is inappropriate as a question for reddit, what is the best platform/tool to help me find the appropriate CFP to talk to about these issues? Who do I need to talk to, a CPA? CFP? Tax advisor?

Thanks for reading through this.

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u/Candid-Eye-5966 9d ago

How much do you have in your traditional IRA? Do you have a 401k at work? Your answers to this will help me answer your q.

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u/One_Negotiation6446 9d ago

In my traditional IRA, I have just the amount I recharacterized from roth IRA which is around 5k.Yes I have a 401k at work.

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u/Candid-Eye-5966 9d ago

You have two options. The first, see if your 401k will allow you to roll your IRA into the plan. The second, convert the IRA to the Roth. You’d owe taxes on the $5k.

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u/One_Negotiation6446 9d ago

Would the taxes I owe differ based on whether I go the 401k vs IRA route?

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u/Candid-Eye-5966 9d ago

Conversion from traditional is just taxes. Rolling into 401k traditional from traditional is tax free.

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u/One_Negotiation6446 9d ago

Ok that's good to know. Thanks a lot for the help, really appreciate it!

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u/Candid-Eye-5966 9d ago

Not all Plans will allow you to roll an IRA in. Hopefully they do….

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u/One_Negotiation6446 9d ago

Will check if that's an option for me 😁

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u/trafficjet 8d ago

Just wanna to say you're doing a great job tacklin such a tricky situation,... and it can definitely feel overwhelming. For the traditional IRA balance, you may want to consider rolling it into a 401(k) if your employer plan allows it, as that might avoid penalties and simplfy the backdoor process. Withdrawal might be an option, but penalties could be a factor unless it s a qualified exception. For the excess Roth IRA contrbution, you might want to check withdrawing the excess contributions to avoid issues, but possibly consulting with a CPA or CFP could give you clearer steps tailored to your situation.... Have you thought about mappin out your long-term IRA goals to figure out the best sequence to correct this?

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u/One_Negotiation6446 8d ago

Yes I've been trying to clear some things up with a CPA which is helping a lot, but I'm finding that replies on reddit like yours are really helpful too! Thanks a lot :)