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Retirement tax questions
Thank you all for the detailed instructions. I ran into another problem that had not been described in this thread.
After I added the substitute 1099-R to report the withdrawn excess contribution + earnings, my MAGI increased by the earnings as expected. However, with the higher MAGI due to the earning, my maximum allowable ROTH contribution further decreased. Therefore, I still ended up with a residual "excess contribution" even after removing the excess contribution based on my original MAGI (before the earnings).
For example, say based on my original MAGI, I over contributed to ROTH by 1,000. So, I withdrew 1,000 excess contribution plus 100 earning by April 15. As I reported the 100 earning as income, my MAGI increased by 100, and thus the new "excess contribution" was now 1,050 based on my new MAGI. However, I had only withdrawn 1,000 earlier. Therefore, I still had 50 in excess contribution which was then subject to the 6% penalty.
Something doesn't feel right. I'm using Turbotax Desktop Deluxe. Please advise.