So just to be clear. I already removed the excess amount with the earnings from 2020 and filed for 2020.
My main goal is to prevent when I get that 1099-R to amend the 2020 return... the earnings will bump up my MAGI and make the original withdrawal insufficient because my allowance would even be less with the slight increase in income sending me into this excess withdrawal loop.
My goal is to just close the Roth IRA account completely. It was started in 2020 and only had $6000 original input. I took out the $2000 plus earnings. I want to close out the account and transfer the remaining amount to a brokerage account so hopefully when I amend my 2020 return I'd just be paying the 10% penalty and not be worrying about removing even more from the account because of the increased MAGI.
@DanaB27
You wrote:
To avoid the 6% penalty you will have request another withdrawal of excess contribution plus earnings to eliminate any excess contribution on your 2020 tax return when you close your account before the due date.
... I'm confused by this. Why would I need to request another withdrawal of excess but I'm going to close the entire Roth IRA account and remove every single dollar in it. Technically I should be just on the hook for the 10% on the earnings correct?
Like when I amend my 2020 return next year they are going to see the earnings and tax those as income + 10% but it won't be like oh well your Roth IRA is over and more needs to be removed because I technically closed the account and there are no more contributions.
