SEP IRA contribution for 2023 marked as 2024 - can I fix this tax nightmare?

This is actually fixable but you need to act quickly! The deadline you mentioned (10/15/24) is correct for recharacterizing contributions, but your situation is a bit different. Since your contribution was made before the 2023 filing deadline (4/15/24) but was incorrectly coded as a 2024 contribution, you should contact Fidelity immediately. They can help you request a correction from your previous financial institution. This isn't technically a "recharacterization" (which refers to converting between different types of IRAs) but rather a correction of an administrative error. Ask Fidelity to provide documentation showing the contribution was intended for 2023 but incorrectly coded. You'll want to gather any proof you have that shows your intent - emails to your advisor, contribution forms, etc. The previous institution should be able to issue corrected statements. If they won't fix it, then yes, you would need to amend your 2023 return to remove the deduction. But don't jump to that option yet - administrative errors like this can often be fixed.

After dealing with a nearly identical issue last year, I found this amazing service called taxr.ai (https://taxr.ai) that helped me untangle my SEP IRA mess. I uploaded my statements from both financial institutions and they analyzed everything and created a detailed document explaining exactly what happened with my contribution year mix-up. They identified specific IRS guidelines that applied to my situation and created documentation that helped resolve the conflict between what my tax return claimed and what my financial institution reported. The best part was they provided a letter I could send to both the financial institution and the IRS explaining the situation. My previous broker finally fixed the coding issue rather than deal with the formal complaint process.

I was super skeptical about taxr.ai at first (sorry for being doubtful in my earlier comment), but I ended up trying it because I was in such a time crunch with my own SEP IRA contribution mess. Using the service was actually way more efficient than the three calls I made to CPAs who all gave me slightly different advice. They analyzed my SEP IRA statements from both financial institutions and even found another small reporting error I wasn't aware of. The documentation they provided had specific IRS code citations that my previous advisor's compliance department actually responded to. Got my contribution year fixed without having to amend my return or pay any penalties. Would've been a $9,800 tax hit otherwise. Just sharing since I became a believer after being in a similar bind with a SEP IRA contribution year issue. Time was definitely a factor and this saved me weeks of back-and-forth.

I had a similar issue last year (though with a standard IRA, not a SEP), and after weeks of getting nowhere with either investment company, I used Claimyr (https://claimyr.com) to actually get through to a real person at the IRS. Check out this demo video if you're curious how it works: https://youtu.be/_kiP6q8DX5c The IRS actually had really clear guidance on this situation since it was a coding error, not a true recharacterization. After just one 45-minute call, I had clear documentation of what needed to be fixed and the previous investment company finally corrected their error when they realized I had directly consulted with the IRS instead of just getting the runaround.

I'm seriously eating my words right now. After expressing skepticism about Claimyr in my comment yesterday, I decided to try it this morning out of desperation because my SEP IRA situation is so similar to yours, and my October deadline is coming up. Got connected to an IRS retirement specialist in about 27 minutes (I timed it). The agent confirmed this is actually a common problem and isn't technically a "recharacterization" but a "correction of administrative error." She explained exactly what documentation I needed and even offered to make a note in my file about the situation. The most valuable part was getting the specific IRS notice number that covers this exact scenario, which I immediately sent to my old financial advisor. Their tune changed completely when they saw I had spoken directly with the IRS and had the correct regulatory guidance. They're processing the correction now. Sorry for doubting the service - it literally saved me thousands in taxes I almost paid unnecessarily.

Before you panic, check if your contribution was actually RECEIVED by the advisor on 4/1/24 or if that was just when you sent it. Sometimes there's a processing delay and they might have received it after the 4/15 deadline, which would explain why it was coded for 2024. That happened to me once - I sent the money on 4/10 but it wasn't received and invested until 4/18, so it had to be a contribution for the next year.

Has anyone actually been audited for this type of issue? I accidentally had a similar situation last year but just left it alone. My contribution was coded for the wrong year but I took the deduction anyway on my taxes. It's been 18 months and nothing has happened. Maybe I'm living on borrowed time but wondering if the IRS actually cross-references these?