Hi,
I contributed $6000 at the beginning of 2020. However, throughout the year, the extra income I have earned made it no longer eligible for me to contribute anything for 2020. According to the IRS formula, the amount ( initial contribution + income) that I need to remove is greater than $6000.
For example, if the amount I needed to remove from the ROTH IRA to avoid the 6% penalty is $6500, can I first recharactorize $6000 to traditional IRA, then remove the $500 as a distribution and pay the 10% early distribution penalty on the $500?
If that's not possible, is the timely removal of the excess before the tax filing my best option?
Also, regarding the formula to calculate net income (see below), what date should I use for "adjusted closing balance"? should it be 12/31/2020?
Excess contribution * [(adjusted closing balance - adjusted opening balance) / adjusted opening balance ]
Thank you very much!
