Accidentally did a distribution withdrawal from my Roth IRA instead of excess contribution withdrawal

Forum|Forum|9 months ago
September 23, 2025
1 reply
18 views

I have a Roth IRA account through Merrill and have contributed $4,000 to it so far this year (2025). However, recently realize I will be making too much money this year to contribute to my Roth IRA. I read online that I can remove the excess contribution so I transferred the money out of the Roth account. Unfortunately, I realized I did this wrong and the withdrawal was done as a distribution withdrawal instead of a excess contribution withdrawal. I tried calling Merrill to see if it can be corrected but they said there's nothing they can do and a tax form has already been generated and will be sent to the IRS. They said I'll have to talk to a tax advisor to see if there's anything I can do.

I was wondering if this is something I can correct myself in the TurboTax app when filing my return next year? If so, how?

I still want to contribute the max allowed for this year so I was thinking of contributing $7,000 to a traditional IRA and rolling it over to the Roth. Would there be any issue with this or should I play it safe and only do $3,000?

As far as earnings from the contributions, I actually lost a money from the account overall since making the contributions.

Thanks for any information or advice in advance!

IRA

Best answer by Opus 17

@tyentr99 wrote:

@Opus 17

I currently have $0 in any traditional IRA. I had rolled over my old traditional IRA with a balance of $1,894.76 to my Roth this year. I have not made any contributions a traditional IRA this year.

My Roth IRA currently has $1,688.42 in it.

I made the $4,000 regular withdrawal today, so less than a day old.

Thanks!

OK, so you have 60 days to do a rollover, that is a transfer from one Roth IRA to another or even back to the same IRA, without tax consequences.

I would send the $4000 back to the Roth IRA as a rollover, not an original contribution. This might take some extra paperwork (i.e. there might be a form to fill out that is more than a simple contribution). But note that you can only do this kind of rollover (where the money comes to you in between) once per year. You can do as many direct transfers as you like.

Once the money is safely in the Roth IRA, you have two options. One is to withdraw the excess (plus earnings) via the special procedure. But if your ultimate goal is to have the money in a traditional IRA as a non-deductible contribution that you can convert to a Roth (backdoor Roth), then you don't need to withdraw and re-deposit it. Just do a recharacterization. You can recharacterize the Roth contribution as a traditional IRA contribution, this means the trustee will move the $4000 contribution (plus earnings) into a traditional IRA, as if it had been there all along. Then later you can to a conversion to a Roth IRA as a "backdoor" Roth. Yes, it's a lot of steps to end up right where you are now, but that's how the law works. When you do the Roth conversion, the earnings will be taxed at that time. But if you do the "withdrawal of excess" procedure the earnings will still be taxed.

Then, if you want to maximize your IRA contributions, you can make another $3000 non-deductible contribution to a traditional IRA (to get to a total of $7000 contributions for the year) and convert that to a Roth.

O

Opus 17

Level 15

What are your current balances in Roth and traditional IRAs?

When did you do the regular withdrawal? Was it more or less than 60 days ago?

T

tyentr99Author

Level 2

@Opus 17

I currently have $0 in any traditional IRA. I had rolled over my old traditional IRA with a balance of $1,894.76 to my Roth this year. I have not made any contributions a traditional IRA this year.

My Roth IRA currently has $1,688.42 in it.

I made the $4,000 regular withdrawal today, so less than a day old.

Thanks!

O

Opus 17

Answer

Level 15

@tyentr99 wrote:

@Opus 17

I currently have $0 in any traditional IRA. I had rolled over my old traditional IRA with a balance of $1,894.76 to my Roth this year. I have not made any contributions a traditional IRA this year.

My Roth IRA currently has $1,688.42 in it.

I made the $4,000 regular withdrawal today, so less than a day old.

Thanks!

OK, so you have 60 days to do a rollover, that is a transfer from one Roth IRA to another or even back to the same IRA, without tax consequences.

I would send the $4000 back to the Roth IRA as a rollover, not an original contribution. This might take some extra paperwork (i.e. there might be a form to fill out that is more than a simple contribution). But note that you can only do this kind of rollover (where the money comes to you in between) once per year. You can do as many direct transfers as you like.

Once the money is safely in the Roth IRA, you have two options. One is to withdraw the excess (plus earnings) via the special procedure. But if your ultimate goal is to have the money in a traditional IRA as a non-deductible contribution that you can convert to a Roth (backdoor Roth), then you don't need to withdraw and re-deposit it. Just do a recharacterization. You can recharacterize the Roth contribution as a traditional IRA contribution, this means the trustee will move the $4000 contribution (plus earnings) into a traditional IRA, as if it had been there all along. Then later you can to a conversion to a Roth IRA as a "backdoor" Roth. Yes, it's a lot of steps to end up right where you are now, but that's how the law works. When you do the Roth conversion, the earnings will be taxed at that time. But if you do the "withdrawal of excess" procedure the earnings will still be taxed.

Then, if you want to maximize your IRA contributions, you can make another $3000 non-deductible contribution to a traditional IRA (to get to a total of $7000 contributions for the year) and convert that to a Roth.