Retirement tax questions

Here is what you can do regarding the contribution and distribution of the $6,000 you made in early 2021:

• If, in 2021, you made traditional IRA contributions or Roth IRA contributions for 2021 and you had those contributions returned to you with any related earnings (or minus any loss) by the due date (including extensions) of your 2021 tax return, the returned contributions are treated as if they were never contributed. Don't report the contribution of distribution on Form 8606 or take a deduction for the contribution. However, you must include the amount of the distribution with related earnings, you are generally subject to the additional 10% tax on early distributions.
•  If you made a contribution for 2020 and you had it returned to you in 2021 as described in the paragraph above, do NOT report the distribution on your 2021 tax return. Instead, report it on your 2020 original return (if not filed yet) or amended return in the manner described in the paragraph above. 

For future planning purposes, if you want to contribute to Roth IRA and your income level disallows it and want to consider Backdoor Roth conversion, make sure all the deductible IRA contributions are out of your IRA accounts. One way to achieve this is to roll over to your 401(k) plan if the plan allows.  

IRA total does NOT include money in company 401(k). 

Here is a link to IRS instructions for Form8606 on Return of IRA Contributions.

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