IRA with active participation

[kathyc2]

Clients income increased quite a bit in 2017 and deductible IRA portion is limited as he has retirement account at work.

I'm not finding where I can have him essentially undo the contribution and have it returned in a similar manner as to how an excess contribution would be treated. I see that I can treat it as a basis 8606 IRA, however I would prefer to find a way for them not to have to deal with the taxable calculation for the rest of their lives.

Does anyone have information as to if the traditional contribution can essentially be undone?

[Rapid Robert]

Does anyone have information as to if the traditional contribution can essentially be undone?

https://www.irs.gov/publications/p590a#en_US_2016_publink1000230703

The 2017 version of the pub is not yet there, but I'm sure the process is the same.

[kathyc2]

https://www.irs.gov/publications/p59...link1000230703

The 2017 version of the pub is not yet there, but I'm sure the process is the same.

I already looked at that and didn't see where it says the contribution can be removed if non-deductible.

[Rapid Robert]

I already looked at that and didn't see where it says the contribution can be removed if non-deductible.

That's actually one of the requirements for taking back the contribution -- that there was no deduction claimed. I don't know how the text could be more plain in its meaning. You actually have until six months after the unextended due date, if Filed pursuant to section 301.9100-2.

"If you made IRA contributions [for the tax year], you can withdraw them tax free by the due date of your return. If you have an extension of time to file your return, you can withdraw them tax free by the extended due date. You can do this if, for each contribution you withdraw, both of the following conditions apply.

You did not take a deduction for the contribution.

You withdraw any interest or other income earned on the contribution. You can take into account any loss on the contribution while it was in the IRA when calculating the amount that must be withdrawn. If there was a loss, the net income earned on the contribution may be a negative amount."

[kathyc2]

That's actually one of the requirements for taking back the contribution -- that there was no deduction claimed. I don't know how the text could be more plain in its meaning. You actually have until six months after the unextended due date, if Filed pursuant to section 301.9100-2.

"If you made IRA contributions [for the tax year], you can withdraw them tax free by the due date of your return. If you have an extension of time to file your return, you can withdraw them tax free by the extended due date. You can do this if, for each contribution you withdraw, both of the following conditions apply.

You did not take a deduction for the contribution.

You withdraw any interest or other income earned on the contribution. You can take into account any loss on the contribution while it was in the IRA when calculating the amount that must be withdrawn. If there was a loss, the net income earned on the contribution may be a negative amount."

Ah, thanks! It would have been helpful if 590A would have a link to page 32 as an option when they were discussing phaseouts earlier in pub.