Ok. That was my other option that I was considering. That makes sense. I had one more clarifying question since Vanguard processed the excess contribution removal in two separate transactions.
Background:
- I made two contributions to my 2023 SEP IRA with Vanguard
- $28,000 on 10/10/23
- $5,000 on 01/9/24
- I requested an excess contribution withdrawal of $8,000 on 3/24/24 (I understand I need to pay taxes on the earnings made on the $8,000)
- Vanguard spilt it up the excess withdrawal into two transactions, one for $5,000 and the other for $3,000 (I believe their excess withdrawal logic starts from the latest contribution and works backwards)
- Vanguard also processed a 10% federal and 10% state withholding on the earnings for each withdrawal
So, do I only file the $45.28 earnings associated to the $3,000 excess removal on the 2023 tax return, and then file the $75.45 earnings associated with the $5,000 excess removal in the 2024 tax return?
