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Level 2
posted Apr 17, 2021 7:49:58 PM

Can After tax contribution to traditional IRA be returned?

Hi everyone,

 

I made an after tax $6000 contribution to traditional IRA account and want to convert to Roth IRA, but the pro rata rule makes the $6000 almost fully taxed again. So I would like the contribution to be returned to my non-retirement account? 

 

Can I use  "return of excess contribution request" for to request the return, even it's not excess contribution? I know I will need to pay tax on gains, I wonder do I need to pay tax on the return of the $6000 (it's after tax money).

 

Thanks for your help

0 2 1476
2 Replies
Level 15
Apr 17, 2021 8:19:35 PM

If it was a 2020 contribution then you have until May 17 (or Oct 15 if you either file for an extension or timely file a 2020 tax return before May 17) to request that the IRA custodian does a "return of contribution plus any earnings" attributed to the contribution.   The IRA custodian should calculate the earnings.   You will receive a 1099-R with the earnings (of any) in box 2a and those will be taxable on your 2020 tax return.

 

 

 

Level 2
Apr 18, 2021 5:33:38 AM

Thank you macuser_22, it's 2020 contribution. If it's returned, do I need to report it on 2020 tax return, or I should wait until receiving 1099-R form and report it on 2021 tax return?