I realized that I overcontributed to a Roth IRA this year. As it is still before the filing deadline, I will now withdraw the overcontribution amount (plus earnings).
Part 1: Regarding the "...plus earnings," my account balance is actually at a loss, so I'm trying to determine how much I actually need to withdraw. Easiest to discuss with some hypothetical numbers:
* Let's say the account balance was $10,000 prior to this year's (over-)contribution.
* Then I contribute $6000 this year, bringing the balance to $16,000
* I now realize that I was only eligible to contribute $4000 (so $2000 was an overcontribution)
* Today, the account balance is $15,000 (aka it has lost $1000 in overall value since the contribution)
* How much do I need to withdraw?
It seems most logical to me that it would just be: ($16,000-15,000)/16,000=6.25% loss. Thus I withdraw (1-.0625)*$2000=$1875? Or maybe the IRS still requires you to withdraw the full $2000? Or maybe they require something more convoluted, like any dividends are "earnings" regardless of the total balance, etc?
Part 2: Once I've determined & withdrawn the proper amount, do I need to do anything special in TurboTax? Or I simply fill it in as if I originally contributed the proper amount, & I don't have to do any extra paperwork?
Thanks in advance
