Roth IRA, Traditional IRA, 401K » excess http://www.iraroth.net IRA Questions and Answers Tue, 17 Jan 2012 00:09:43 +0000 en hourly 1 http://wordpress.org/?v=3.3.1 What to do with the capital gain from the excess roth IRA contribtution? http://www.iraroth.net/2011/10/what-to-do-with-the-capital-gain-from-the-excess-roth-ira-contribtution/ http://www.iraroth.net/2011/10/what-to-do-with-the-capital-gain-from-the-excess-roth-ira-contribtution/#comments Sun, 30 Oct 2011 22:46:25 +0000 admin http://www.iraroth.net/2011/10/what-to-do-with-the-capital-gain-from-the-excess-roth-ira-contribtution/ Question by NewIntheCity: What to do with the capital gain from the excess roth IRA contribtution?
I overcontributed $ 1200 to my roth IRA for 2006. This contribution has made some capital gain. I understand that I need to file a IRA distribution to take out the excess contribution to avoid IRA penalty. However, what should I do with the gain from the excess contribution?

Thanks,

Best answer:

Answer by jerry
Earnings on the excess will be considered as received in the year the contribution was made, and are taxable for that year, plus the 10% penalty (assuming you are under 59 1/2).

You can possibly avoid the excise tax if you more the excess Roth contribution and the earnings on the excess either by transferring to a regular IRA (trustee-to- trustee) before the deadline for the year in which the contribution is made.

I would probably suggest contacting your IRA broker to see if they can help you out and offer any alternatives.

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]]> http://www.iraroth.net/2011/10/what-to-do-with-the-capital-gain-from-the-excess-roth-ira-contribtution/feed/ 0 Is an excess Roth IRA contribution taxable when withdrawing it after the tax filing deadline with extension? http://www.iraroth.net/2011/02/is-an-excess-roth-ira-contribution-taxable-when-withdrawing-it-after-the-tax-filing-deadline-with-extension-2/ http://www.iraroth.net/2011/02/is-an-excess-roth-ira-contribution-taxable-when-withdrawing-it-after-the-tax-filing-deadline-with-extension-2/#comments Fri, 25 Feb 2011 22:26:35 +0000 admin http://www.iraroth.net/2011/02/is-an-excess-roth-ira-contribution-taxable-when-withdrawing-it-after-the-tax-filing-deadline-with-extension-2/ Question by pkmoney555: Is an excess Roth IRA contribution taxable when withdrawing it after the tax filing deadline with extension?
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?

Best answer:

Answer by MukatA
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.

What do you think? Answer below!

]]> http://www.iraroth.net/2011/02/is-an-excess-roth-ira-contribution-taxable-when-withdrawing-it-after-the-tax-filing-deadline-with-extension-2/feed/ 1 What form to modify excess IRA contribution? http://www.iraroth.net/2009/12/what-form-to-modify-excess-ira-contribution/ http://www.iraroth.net/2009/12/what-form-to-modify-excess-ira-contribution/#comments Sat, 26 Dec 2009 18:02:32 +0000 admin http://www.iraroth.net/2009/12/what-form-to-modify-excess-ira-contribution/ I just realized that I contributed $1000 to ROTH IRA , but I also contributed $4000 to Traditional IRA. I assume it is not ok, but I don’t know what I should do now. I don’t think it will affect my refund, but do I still need to file corrections? Thanks for any help!

]]> http://www.iraroth.net/2009/12/what-form-to-modify-excess-ira-contribution/feed/ 2 Is an excess Roth IRA contribution taxable when withdrawing it after the tax filing deadline with extension? http://www.iraroth.net/2009/12/is-an-excess-roth-ira-contribution-taxable-when-withdrawing-it-after-the-tax-filing-deadline-with-extension/ http://www.iraroth.net/2009/12/is-an-excess-roth-ira-contribution-taxable-when-withdrawing-it-after-the-tax-filing-deadline-with-extension/#comments Tue, 01 Dec 2009 02:48:52 +0000 admin http://www.iraroth.net/2009/12/is-an-excess-roth-ira-contribution-taxable-when-withdrawing-it-after-the-tax-filing-deadline-with-extension/ 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?

]]> http://www.iraroth.net/2009/12/is-an-excess-roth-ira-contribution-taxable-when-withdrawing-it-after-the-tax-filing-deadline-with-extension/feed/ 3