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I over contributed to Roth IRA. I'm applying for excess contribution with my plan administrator (Fidelity). Should I ask them to withhold taxes or have Turbotax do it?
I over contributed to Roth IRA. I realized this when I noticed my AGI while filing my returns. I have applied for extension and bought some time. Now I am filling up the excess contribution form from my Roth IRA plan administrator (Fidelity). It gives me these options for paying taxes on earnings-
1. Have them withhold taxes at a certain percentage specified by me,
2. Ask them not to withhold anything
Which one of them should I select?
My understanding is that it shouldn't matter because in either case, those details would be there on my 1099-R. Whether I paid taxes on my Roth earnings or not, Turbo tax would be able to read it from my 1099-R and take that into account while calculating the final refund/debt.
Can you confirm if that's correct?
Thanks!