Made a $6000 contribution to wife's (pre-tax) IRA for Tax Year 2019 in March 2020. Just found out that it is non-deductible due to our combined income and my workplace retirement plan. From my understanding I can leave it or reverse it (without penalty) since I am within the same Tax year. Based on the tax basis at time of deposit I would have to withdraw $6844.
Questions:
1. If I leave it, the only consequence is that I get taxed again on the $6000 when I retire correct since this is an allowable contribution, just not deductible?
2. Do I have to withdraw this whole amount or can I just withdraw the $6000 and avoid paying income on the $844 in growth?
3. Would the taxes due on the $844 in growth be due on 2020 taxes since both deposit and withdrawal both occurred in 2020?
4. I wouldn't report anything about this transaction (the deposit or the reversal) on my 2019 taxes at all?
Thank you so much, really appreciate any advice.
