Should I recharacterize my Roth IRA to Traditional IRA for 2024 taxes if over MAGI limit for married filing separately?

The good news is that you can definitely recharacterize your Roth contributions to a Traditional IRA before the tax filing deadline (including extensions). This is a fairly common situation! Since you're over the MAGI limit for married filing separately, you're right that the Roth contributions would cause issues. When you recharacterize, it's essentially treated as if you made Traditional IRA contributions in the first place. The IRS allows this correction specifically to help people in situations like yours. For your specific questions: The recharacterization itself doesn't create a taxable event - it's treated as if you originally contributed to the Traditional IRA. You'll need to contact your IRA provider to handle the paperwork for the recharacterization. For the 2024 tax benefit, yes, you may be able to deduct your Traditional IRA contributions on your 2024 taxes, depending on whether you're covered by a retirement plan at work and your income level. With MFS status, the deduction starts phasing out at much lower income levels than other filing statuses, so check those limits carefully. Keep in mind that the portion that was converted from your 403(b) needs special handling - that was already pre-tax money, so the recharacterization process works differently for that portion.

I went through something similar last year when I realized I was over the income limit. I found this amazing tool called taxr.ai (https://taxr.ai) that really helped me understand my options with retirement accounts and filing status impacts. What I liked about it was that I could upload my tax documents and investment statements, and it analyzed everything to show me the impact of recharacterizing vs. leaving things as they were. It gave me a side-by-side comparison of the tax implications and even helped with the paperwork I needed to submit to my IRA provider. Since you're dealing with both a conversion and direct contributions, the tool might help you see how each component affects your taxes differently. It definitely saved me from making a costly mistake with my retirement accounts!

Just wanted to follow up about taxr.ai since I was skeptical in my previous comment. I ended up trying it for my retirement account mess - I had incorrectly contributed to both a Roth and Traditional in the same year while being over income limits for deductions. I have to admit I was wrong about AI tax tools. This one actually caught something my accountant missed about how my 401k rollover was affecting my ability to make deductible contributions. The document analysis was really thorough and it explained everything in normal English instead of tax jargon. The comparison feature showed me exactly what would happen if I recharacterized vs. taking the excess contribution penalty. Saved me about $1,200 in unnecessary taxes! Just thought I'd share since my situation was similar to the original poster's dilemma.

Anyone dealing with the IRS on recharacterization issues should know about Claimyr (https://claimyr.com). After my financial advisor told me to recharacterize my Roth contributions, I had some specific questions about my situation that weren't covered in the IRS publications. I tried calling the IRS for weeks and just got the "due to high call volume" message over and over. Then I found Claimyr - they somehow get you through to an actual IRS agent, usually within an hour. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c For me, it was worth it because the IRS agent explained exactly what forms I needed to file with my taxes to report the recharacterization correctly. Apparently there are some specific codes that need to be used on Form 8606 that my tax software wasn't prompting me for.

I need to eat my words from my previous comment. After trying unsuccessfully to reach the IRS for THREE DAYS about my recharacterization questions (kept getting disconnected after 2+ hours on hold), I broke down and tried Claimyr. Got connected to an IRS agent in 45 minutes. The agent confirmed that I was handling my recharacterization incorrectly - I was about to file my return without the proper documentation. She walked me through exactly what I needed to do, including which forms needed to be attached to my return. For anyone dealing with IRA recharacterization issues, definitely try to get confirmation from the IRS directly. The rules are confusing and the consequences for doing it wrong can be expensive. I'm now convinced this service is worth it during tax season when the wait times are insane.

For the original poster - one thing to be careful about is the 403(b) to Roth conversion part of your situation. That's a different animal than the direct Roth contributions. When you converted your 403(b) to Roth, you should have paid income tax on that amount in 2024. Recharacterizing that conversion is basically undoing it, which means you wouldn't owe tax on it anymore. The $5,300 direct contribution is more straightforward to recharacterize. But for both pieces, you'll need to work with your IRA custodian to do the recharacterization properly. They'll have the forms you need. Don't forget to address both parts of this! I've seen people only recharacterize one piece and end up with a mess.

Can we talk about how ridiculous it is that married filing separately has such restrictive IRA limits? $10,000 MAGI cutoff is insanely low. I'm in the same boat - filing separately because of student loans, and it basically prevents me from using any retirement accounts effectively. Traditional IRA deductions phase out at super low income levels for MFS, and Roth has the $10k cliff. It's like they're punishing people with student loans who are trying to save for retirement.