ThomasM125
Employee Tax Expert

Retirement tax questions

The amount recharacterized is not taxable, but you are subject to a penalty for over-contributing to your IRA in the amount of the earnings in this case. The earnings are not taxable until you withdraw them. Since they are still in the IRA, you don't pay tax on them, but you are subject to a 6% penalty for each year the excess contribution remains in the account.

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