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Level 1
Oct 16, 2018 11:08 PM UTC
Question

Roth IRA

My college student  made a deposit in their Roth IRA that was credited for 2018 and should have been for 2017. The deposit was made on April 17, 2018. I didn't worry about it, figuring she would have a job at some time during 2018. Well, guess what no job. Now we have a deposit with no income. What is the best way the handle this deposit so it doesn't cause any issues moving forward. The deposit was under $400.

 

Thank you

1 reply

Carl
Level 11
Level 11
Oct 17, 2018 12:20 AM UTC

Withdraw the deposit immediately, and make sure the withdrawal includes any earnings on that deposit too. Then at tax filing time you'll be able to indentify it as the withdrawal of an over contribution, and will only be taxed on the earnings, since you're already taxed on the base amount deposited.