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Hi Phil,
Thank you and I really appreciate your responses.

No. You'd now have an excess 2009 Roth contribution of $4,000. See Worksheet 2-2 on page 63 of Pub 590. Note that you first apply the income phaseout to the $5,000 limit, then subtract your traditional IRA contributions to reach your allowable Roth contribution.

I'm still not satisfied on this point.
It was my understanding that the income limitation only applies to the Roth, not the traditional IRA. It should not affect the total amount that you can contribute to all of your IRA's. In other words even if you can contribute only $3000 to your roth, you can still contribute $5000 total to your IRA's for the year, so another $2000 should still be able to go to the traditional IRA without affecting the Roth overpayment.

Even the worksheet you pointed me to seems to support my understanding of it. Working through the example, if my Roth limit which is calculated first was $3000 on line 8, the following lines would be:
8. 3000 <== calculated reduced Roth IRA limit
9. 2000 <== contributions to other IRA's
10.3000 <== subtract line 9 from line 6 (the $5000 limit)
11.3000 <== lesser of 8 or 10 -> Final Roth contribution limit

So, this worksheet still allows for a total of $5000 to the IRA's for the year. So according to this, I'd have $2000 in traditional, and $3000 in Roth (and in my case another $2000 excess contribution over my Roth limit.)


Another way to illustrate it is to change the order of events:
Say that I had contributed first $2000 to a traditional IRA.
Then I contributed $3000 to a Roth IRA. All is fine at this point.
Then say I contributed another $2000 to the Roth.

Would you then say that I need to take the $2000 out of the traditional IRA? I don't think so. I think it is just a $2000 excess Roth contribution. Am I wrong?



But anyway... this may all be a moot point for my situation. I may just take your suggestion and do the recharacterization of the overpayment to a traditional IRA, and then all will be fine.

Thanks again for the help.

--Pete
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