Thank you. So, to summarize (for my simplistic brain)...
- The incorrect withdrawal resulted in 10% of the IRA being witheld (1,500 from 15,000)
- If the IRA balance was kept, all of it would be considered income - a significant problem.
- But since we rolled it over (minus the 10% penalty), only the 10% penalty is considered "income" (1,500).
- The $1500 "income" will be added to our other income and taxed appropriately.
- In addition there is the "10% of the 10%" penalty, so $150.
Do I have it?
