When does a Roth IRA Recharacterization count for Tax Year 2023 vs 2024?

You're absolutely right to question this. The IRS rules on recharacterizations are about when the process is completed relative to your tax filing deadline, not the calendar year. Based on what Publication 590-A says, both recharacterizations should be reported on your 2023 tax return because they were both completed before the filing deadline for 2023 taxes (which would be April 15, 2024, unless you file for an extension). The important factor is that both recharacterizations were for 2023 contributions and both were completed before the 2023 tax filing deadline. The fact that one was physically processed in January 2024 doesn't push it to the 2024 tax year. I'd suggest calling Vanguard back and speaking with a different representative, perhaps asking for someone in their tax reporting department specifically. They should issue a corrected 1099-R that includes both recharacterizations.

I went through something very similar with my IRA recharacterization and was going in circles with my broker. What really helped me was using taxr.ai (https://taxr.ai) to analyze the IRS publications and my specific situation. I uploaded the relevant parts of Publication 590-A and my transaction details, and it confirmed exactly what you're thinking - the recharacterization counts for the tax year of the original contribution as long as it's completed before the filing deadline. The tool broke down all the rules and even provided me with the exact language I needed to cite when I called my broker back. Saved me hours of stress and research!

Just wanted to update that I tried taxr.ai for my complicated recharacterization/backdoor Roth situation! It was actually really helpful - I uploaded my 1099-R, Form 8606 from last year, and screenshots of my transaction history. The analysis clarified exactly which transactions belonged to which tax year and how to report everything properly. The best part was it explained the "step transaction doctrine" implications for my backdoor Roth, which I hadn't even considered. I was going to wait too long between steps which could have caused problems. Definitely worth checking out if you're dealing with IRA timing issues!

This is exactly why I started using Claimyr (https://claimyr.com) to get through to the IRS directly about these complicated timing issues. I spent WEEKS trying to get my brokerage to fix a similar reporting mistake, but they kept insisting they were right when I knew they weren't. Using Claimyr, I was able to get through to an actual IRS agent in about 20 minutes (instead of waiting on hold for hours or getting disconnected). The agent confirmed exactly what you're saying - recharacterizations count for the contribution tax year as long as they're completed before the filing deadline. They even sent me something in writing I could show my brokerage. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c - it's basically a service that navigates the IRS phone tree for you and calls you back when an agent is on the line.

I was completely wrong about Claimyr. After spending THREE HOURS on hold with the IRS yesterday and getting disconnected twice, I decided to try it out of desperation. Got connected to an IRS tax specialist in about 25 minutes while I was making dinner. The agent confirmed exactly what everyone here is saying - recharacterizations count for the year of the original contribution as long as they're completed before the tax filing deadline (including extensions). I even got the agent's ID number and made notes about our conversation in case I need to reference it later. I was genuinely shocked at how well it worked. Definitely using this for all my IRS calls from now on. The peace of mind from getting an official answer directly from the IRS was worth it.

Former tax preparer here. One important detail that hasn't been mentioned: make sure you get documentation from Vanguard showing when you INITIATED the recharacterization request (12/29/2023) as well as when it was completed (1/3/2024). Having both dates documented will help if there's ever any question about your intent to recharacterize within the 2023 calendar year. While the completion date being before the filing deadline is what matters legally, having proof that you requested it in 2023 adds an extra layer of protection.

Anyone know if Vanguard generally fixes these 1099-R issues quickly? I have a similar problem but with Fidelity and I'm getting anxious about tax deadlines approaching.

This is a really common misunderstanding with brokerages! You're absolutely correct based on the IRS rules. I work in tax compliance and see this issue frequently - the key is that recharacterizations are tied to the tax year of the original contribution, not when the transfer physically settles. Since both of your recharacterizations were for 2023 contributions and both were completed before your 2023 tax filing deadline, they should both be reported for tax year 2023. The fact that one settled in January 2024 is irrelevant. When you call Vanguard back, specifically ask for their "Retirement Services Tax Team" or "IRA Tax Specialist" rather than general customer service. Have Publication 590-A ready with the exact quotes you mentioned. Most importantly, reference the "timing" rule you cited - it's very clear that the election and transfer must both occur before the filing deadline for the contribution year. If they still push back, ask them to cite which specific IRS publication supports their position. They won't be able to because the rules are clear. Document everything in case you need to escalate to a supervisor.