Hello,
I have a question about Roth IRA early withdrawals. I am asking this for a family members situation:
- First opened a Roth IRA account and deposited $100 for the year 2022.
- Received the fidelity $100 bonus (labeled as earnings)
- Transferred the money out of the roth ira of $200 (mistake i know)
- Later, contributed $50 for the year of 2023.
I know that they are subjected to early withdrawal penalty and taxes. When they later file for taxes, it will ask on form 8606 line 22 for the basis in Roth IRA contributions.
What would the Roth IRA contribution basis be? I am assuming the basis would be $100 since they took it out before putting in the $50 later. Which would mean they would pay the penalty and taxes on the $100 from earnings. ($100(contribution)+$100(earnings)=$200)
Would the Roth IRA contribution basis be $100 or $150?
