Dec 1

I contributed $6000 to a Roth IRA in 2006, which caused an excess of $2000. It is now after the tax-filing deadline with extension. I know that there is a 6% excise tax penalty already. My question is: Are there any taxes if I withdraw the $2000? And would the early distribution penalty 10% apply since I am under 59 1/2?


3 comments so far...

  • MukatA Said on December 1st, 2009 at 2:49 am:

    No you only pay 6% excise tax. No other penatly. Here if the information:

    In general, if the excess contributions for a year are not withdrawn by the date your return for the year is due (including extensions), you are subject to a 6% tax. You must pay the 6% tax each year on excess amounts that remain in your traditional IRA at the end of your tax year. The tax cannot be more than 6% of the value of your IRA as of the end of your tax year.

    In general, you must include all distributions (withdrawals) from your traditional IRA in your gross income. However, if the following conditions are met, you can withdraw excess contributions from your IRA and not include the amount withdrawn in your gross income.

    Total contributions (other than rollover contributions) for 2006 to your IRA were not more than $4,000 ($5,000 if you are 50 or older).
    You did not take a deduction for the excess contribution being withdrawn.
    The withdrawal can take place at any time, even after the due date, including extensions, for filing your tax return for the year.

  • ninasgramma Said on December 1st, 2009 at 3:47 am:

    You need to withdraw the $2,000 plus any earnings attributable to the $2,000.

    You will pay an excise tax of 6% on the $2,000.
    You will pay income tax plus a 10% penalty on any earnings that have been withdrawn.

  • Britt (Your Roth IRA) Said on December 1st, 2009 at 8:48 pm:

    This article should explain everything:
    your-roth-ira.com/excess-roth-ira-contributions.html

    Essentially, you owe a 6% annual penalty on the excess $2,000 until you withdraw it. It should not be subject to income taxes or an early withdrawal penalty.

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