Yes, you are too late. You're penalized if you make withdrawals before 59 1/2 under most circumstances. You'll owe a 10% penalty on the taxable portion of the distribution. It's not a matter of just removing the nontaxable amount at this point. If you had taken it out before April 15, 2022 there would have been no penalty.
IMPORTANT: You must track this nondeducitble contribution until you retire. If you did not file Form 8606, you need to file it now and it can be filed alone because it is a signature document. Since you did not request the return of contribution by the due date of your return then you will have to file Form 8606 to report this nondeductible contribution (basis). When you later take distributions/convert funds to Roth, you will need the basis information from line 14 of Form 8606
How are non-deductible contributions taxed?
If you made non-deductible contributions, then any distribution contains both a taxable and a nontaxable portion. The nontaxable portion is based on your cumulative after-tax contributions, and the taxable portion is based on the money those contributions earned over time.
For more information about your nondeductible contribution to your IRA click this link: What is Form 8606?
Yes, you are too late. You're penalized if you make withdrawals before 59 1/2 under most circumstances. You'll owe a 10% penalty on the taxable portion of the distribution. It's not a matter of just removing the nontaxable amount at this point. If you had taken it out before April 15, 2022 there would have been no penalty.
IMPORTANT: You must track this nondeducitble contribution until you retire. If you did not file Form 8606, you need to file it now and it can be filed alone because it is a signature document. Since you did not request the return of contribution by the due date of your return then you will have to file Form 8606 to report this nondeductible contribution (basis). When you later take distributions/convert funds to Roth, you will need the basis information from line 14 of Form 8606
How are non-deductible contributions taxed?
If you made non-deductible contributions, then any distribution contains both a taxable and a nontaxable portion. The nontaxable portion is based on your cumulative after-tax contributions, and the taxable portion is based on the money those contributions earned over time.
For more information about your nondeductible contribution to your IRA click this link: What is Form 8606?
Thank you!
Thankfully, Form 8606 was filed for me already with my 2021 return.
When I do decide to take money out of this account, when I reach the correct age, is it going to be easier to just ignore the nondeductible contribution, or is it worth filling out and dealing with, what I imagine is going to be, a bunch of forms (and calculations)?
You should keep the filed Form 8606 with the basis shown on line 14 for your records and enter the basis when taking distributions (when you are 59 1/2). TurboTax does all the calculations and Forms for you and it's an easy step to enter it in the retirement interview. Otherwise, you will be paying taxes again on the money unnecessarily.
Here are the easy steps in the 2022 Turbotax version:
Click on "Search" on the top right and type “1099-R”
If the contribution was a nondeductible traditional IRA contribution and your basis in such contributions is greater than or equal to the amount of the distribution plus your 2023 year-end balance in your traditional IRAs, the distribution would be nontaxable and also not subject to penalty. Only the taxable amount of a traditional IRA distribution is subject to penalty.