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Level 2

If I made the max Roth IRA contribution in Jan. 2017 but then withdrew the total acct balance in Mar. 2017, is there a way to "remake" any 2017 IRA contribution now?

Is there any re-characterization or any other process applied to the withdrawn contribution that would enable me to now make a new Roth or Traditional IRA 2017 contribution before April 15, 2018?  Thanks!

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Level 20

If I made the max Roth IRA contribution in Jan. 2017 but then withdrew the total acct balance in Mar. 2017, is there a way to "remake" any 2017 IRA contribution now?

Presumably the contribution in January 2017 was a contribution *for* 2017, not for 2016, otherwise you would not yet have made a contribution for 2017 (assuming that you made no other contributions in 2017).  If you have not yet made a contribution for 2017 you have until April 17, 2018, the regular due date of your 2017 tax return, to do so.

Had you obtained a "return of contribution" of your contribution for 2017 from the Roth IRA, adjusted for any investment gain or loss while the money was in the Roth IRA, that contribution would be treated as if it never had been made.  However, if you simply obtained a regular distribution, the original contribution is still considered to have been made and you have already maxed out your contribution for 2017.  (A return of contribution is reported by the payer to the IRS differently than a regular distribution.)

Even if you had other money in your Roth IRA that you could now distribute as a return of your 2017 contribution to nullify your original contribution for 2017, you would simply be taking money out only to put it back in again.

8 Replies
Level 2

If I made the max Roth IRA contribution in Jan. 2017 but then withdrew the total acct balance in Mar. 2017, is there a way to "remake" any 2017 IRA contribution now?

TurboTaxAmandaR suggests that I can make a new contribution (up until April 17, 2018).  But my initial inquiry to Vanguard about this tells me that I can't do that because "I've already made a contribution" (even though I withdrew it soon after that).  What do I specifically need to do in order to (re-)make a maximum TIRA contribution for 2017?
Level 20

If I made the max Roth IRA contribution in Jan. 2017 but then withdrew the total acct balance in Mar. 2017, is there a way to "remake" any 2017 IRA contribution now?

As I said in my answer, if you made a "return of contribution," the contribution returned would be treated as if it had never been made.  The response from Vanguard indicates that you received a regular distribution (code J, Tor Q on the Form 1099-R) which does not negate the original contribution.

The only possible way that you could make some amount of new Roth IRA contribution for 2017 would be if you could successfully argue to the satisfaction of the IRS that, despite the coding on the Form 1099-R, the original distribution represented some amount of returned contribution that was adjusted for gain or loss as required by section 408(d)(4) of the tax code and the distribution was incorrectly reported by Vanguard as a regular contribution, but your chance of success is slim.  If the IRS does not accept your argument that the distribution was incorrectly reported by Vanguard, any new contribution that you make for 2017 will end up being an excess contribution subject to penalty.  Given the low chance of success and red flag this would raise with the IRS, the likely answer is that there is NOTHING YOU CAN DO to be eligible to make a new Roth IRA contribution for 2017.
Level 2

If I made the max Roth IRA contribution in Jan. 2017 but then withdrew the total acct balance in Mar. 2017, is there a way to "remake" any 2017 IRA contribution now?

Thanks dmertz.  In talking further with Vanguard there does not appear to have been any means of arranging a "return of contribution" that would have reset the contribution limit.  The only time they accept any funds back following a distribution is within 60 days of the contribution.  You mention the 1099 code -- what code would  Vanguard have assigned if I had been able to exercise "return of contribution"distribution as you suggest?  (I was assigned a T code for distribution because they couldn't verify how long I'd had a Roth account -- not sure what that implies regarding the type of distribution I received; I will be paying taxes on all but the original contributions I made over the years).  In short, I had thought I could achieve a reset of the contribution limit based on article at this link which matches my situation fairly closely:  <a rel="nofollow" target="_blank" href="https://www.rothira.com/blog/can-you-return-withdrawn-roth-ira-contributions">https://www.rothira.co...>.
Level 20

If I made the max Roth IRA contribution in Jan. 2017 but then withdrew the total acct balance in Mar. 2017, is there a way to "remake" any 2017 IRA contribution now?

If the contribution in January 2017 was for 2017, they would coded a return of contribution with codes J and 8.  If the contribution was for 2016 they would have used J and P, I expect.

The reference that you cited is very misleading.  It says, "If you withdraw contributions made during the current tax year you have until the end of the tax deadline (April of the following year) to redeposit the money back in your Roth IRA."  What it doesn't say is that to be able to do so the contribution must be "withdrawn" by making a return of contribution, not by making a regular distribution.

Code T indicates a regular distribution made after you reached age 59½.
Level 2

If I made the max Roth IRA contribution in Jan. 2017 but then withdrew the total acct balance in Mar. 2017, is there a way to "remake" any 2017 IRA contribution now?

Just to be clear, if you want to preserve the right to reinvest a given year's contribution, you need to call and ask specifically for a "return of contribution" even in the course of emptying your entire account, including the contribution?
Level 20

If I made the max Roth IRA contribution in Jan. 2017 but then withdrew the total acct balance in Mar. 2017, is there a way to "remake" any 2017 IRA contribution now?

Yes, it's an explicit "return of contribution" before the due date of the tax return that negates that contribution.
Level 20

If I made the max Roth IRA contribution in Jan. 2017 but then withdrew the total acct balance in Mar. 2017, is there a way to "remake" any 2017 IRA contribution now?

Presumably the contribution in January 2017 was a contribution *for* 2017, not for 2016, otherwise you would not yet have made a contribution for 2017 (assuming that you made no other contributions in 2017).  If you have not yet made a contribution for 2017 you have until April 17, 2018, the regular due date of your 2017 tax return, to do so.

Had you obtained a "return of contribution" of your contribution for 2017 from the Roth IRA, adjusted for any investment gain or loss while the money was in the Roth IRA, that contribution would be treated as if it never had been made.  However, if you simply obtained a regular distribution, the original contribution is still considered to have been made and you have already maxed out your contribution for 2017.  (A return of contribution is reported by the payer to the IRS differently than a regular distribution.)

Even if you had other money in your Roth IRA that you could now distribute as a return of your 2017 contribution to nullify your original contribution for 2017, you would simply be taking money out only to put it back in again.

Level 1

If I made the max Roth IRA contribution in Jan. 2017 but then withdrew the total acct balance in Mar. 2017, is there a way to "remake" any 2017 IRA contribution now?

Yes, you have up until April 17, 2018 to contribute to a new Roth or to a Traditional IRA (or both), up to your max contribution amount.  

Although you may have withdrawn more than that amount in march, you can still only contribute up to the contribution limit of $5,500 or $6,500. Read more at the IRS HERE.