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Excess Roth IRA contri.-Withdrawal

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    Excess Roth IRA contri.-Withdrawal

    Client, for 2005, made a Roth IRA Contribution. Was not eligible for this. Therefore,
    The 4,000. was withdrawn plus earnings of 299. Problem. The $299. is taxable, however,
    is it subject to the 10% early withdrawal penalty?

    #2
    Originally posted by Bird Legs
    Client, for 2005, made a Roth IRA Contribution. Was not eligible for this. Therefore,
    The 4,000. was withdrawn plus earnings of 299. Problem. The $299. is taxable, however,
    is it subject to the 10% early withdrawal penalty?
    No it is not subject to the 10% penalty.
    Brian

    Comment


      #3
      I disagree

      According to the example on page 13-11 in TTB, the earnings that must be withdrawn on an excess contribution IS subject to the 10% early withdrawal penalty assuming the taxpayer does not meet any of the other exceptions.

      The same principal that applies to excess traditional IRA contributions applies to excess Roth IRA contributions.

      BTW, the taxpayer did have the choice of having the Roth contribution recharacterized as a non-deductible traditional IRA, thus allowing the contribution plus earnings to remain in the account.

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