You'll need to sign in or create an account to connect with an expert.
No, very likely you will not be penalized by taking out your contribution. Per IRS, you can always withdraw the amount of how much you contribute without any penalty and tax anytime in the year. Since you are ineligible for the contribution at the first place, IRS will start imposing interest once the contribution was made and you might need to pay some taxes if there is any.
No, very likely you will not be penalized by taking out your contribution. Per IRS, you can always withdraw the amount of how much you contribute without any penalty and tax anytime in the year. Since you are ineligible for the contribution at the first place, IRS will start imposing interest once the contribution was made and you might need to pay some taxes if there is any.
Unless you were age 70½ or older in 2018, the IRA custodian was incorrect in telling you that the contribution cannot be moved to a traditional IRA. Moving the money to a traditional IRA to make the original contribution be a traditional IRA contribution instead of a Roth IRA contribution is called a 'recharacterization.' When the custodian performs a recharacterization, the amount moved to the traditional IRA is the amount of the original contribution to the Roth IRA adjusted for any gain or loss while in the Roth IRA. Recharacterizing the entire $6,500 contribution will result in your tax return showing a deduction for $6,500 traditional IRA contribution on Schedule 1, or, if you chose to make the contribution nondeductible, a nondeductible traditional IRA contribution on Form 8606.
To avoid having to report an excess contribution and pay an excess contribution, you must either do the recharacterization described above or obtain a "return of excess contribution," not a regular distribution. A regular Roth IRA distribution will NOT eliminate the excess contribution penalty for 2018. If you choose not to do a recharacterization, when you ask the Roth IRA custodian to make a return of excess contribution, the custodian will distribute to you the adjusted amount calculated in the same manner as for a recharacterization. If the return of contribution distribution is greater than $6,500 due to investment gains, the gains will be taxable income and, if you are under ate 59½ at the time of this distribution, the gains will also be subject to an early-distribution penalty.
Still have questions?
Questions are answered within a few hours on average.
Post a Question*Must create login to post
Ask questions and learn more about your taxes and finances.
stantonporsche
Level 3
abraga1974
New Member
Maria39520
New Member
monie021817
New Member
krish-ramani789
New Member
©1997-2024 Intuit, Inc. All rights reserved.
Intuit, QuickBooks, QB, TurboTax, ProConnect, and Mint are registered trademarks of Intuit Inc. Terms and conditions, features, support, pricing, and service options subject to change without notice.
Security Certification of the TurboTax Online application has been performed by C-Level Security.
By accessing and using this page you agree to the Terms of Use.
Did the information on this page answer your question?
You have clicked a link to a site outside of the TurboTax Community. By clicking "Continue", you will leave the Community and be taken to that site instead.