cancel
Showing results for 
Search instead for 
Did you mean: 
Highlighted
Level 1

My gain in 2018 IRA was $27,000 but I didn’t work in 2018 and this year. Please let me know I am illegible make a legal contribution in 2019 without penalty Best R

 My gain in 2018 IRA was $27,000 but I didn’t work in 2018 and this year and. I saw my TD Ameritrade IRA maximum contribution for 2019 is $7000. I just contributed $4000 but I really don’t know it is legal or not?  Please let me know I am illegible make a legal contribution in 2019 without penalty Best Regards,


.


1 Best answer

Accepted Solutions
Level 20

My gain in 2018 IRA was $27,000 but I didn’t work in 2018 and this year. Please let me know I am illegible make a legal contribution in 2019 without penalty Best R

Contributions to a traditional IRA are based on *EARNED* income. As I understand it, you had no earned income in 2018. Therefore, your allowed contributions for 2018 was zero. Same will hold true for 2019 if you don't have any "EARNED" income during the entire tax year.

Earnings on the account are irrelevant for tax purposes, until you take a withdrawal from the account.

4 Replies
Level 20

My gain in 2018 IRA was $27,000 but I didn’t work in 2018 and this year. Please let me know I am illegible make a legal contribution in 2019 without penalty Best R

Contributions to a traditional IRA are based on *EARNED* income. As I understand it, you had no earned income in 2018. Therefore, your allowed contributions for 2018 was zero. Same will hold true for 2019 if you don't have any "EARNED" income during the entire tax year.

Earnings on the account are irrelevant for tax purposes, until you take a withdrawal from the account.

Level 1

My gain in 2018 IRA was $27,000 but I didn’t work in 2018 and this year. Please let me know I am illegible make a legal contribution in 2019 without penalty Best R

Hi,


Hi,

Since I saw in my TD Aneritrade IRA: my maximum contribution in 2019 is $7000 and I contributed already $4000 and I never use this $4000 to buy any stock.

Therefore; would you let me know how I can withdraw back $4000 without penalty.

Best Regards,

Kim-Dung T Doan

Level 20

My gain in 2018 IRA was $27,000 but I didn’t work in 2018 and this year. Please let me know I am illegible make a legal contribution in 2019 without penalty Best R

You need to contact and talk with the plan administrator. If this is an IRA you opened, then you need to talk to the financial entity you opened it with, so as to ensure the 1099-R that you *will* be issued for the withdrawal, will be coded correctly in box 7.
If coded correctly, you won't pay a penalty, but you will pay taxes on any earnings from that $4000. When you withdraw it, you also need to withdraw the earnings of that $4000. So you'll have to talk with the account administrator about figuring out what that earnings amount will be on the date of withdrawal.
Level 20

My gain in 2018 IRA was $27,000 but I didn’t work in 2018 and this year. Please let me know I am illegible make a legal contribution in 2019 without penalty Best R

To be more specific, the distribution must be made as a "return of contribution" with the amount distributed being the amount returned adjusted for investment gain or loss, not a regular distribution.  (The rate of gain or loss is determined over *all* of the investments in the IRA account, the entire account balance.)  If done before the end of 2019 it will be coded with code 8 (along with code 1 of you are under age 59½ at the time of the distribution.

If the the IRA gained value while the $4,000 was in the account, the gains distributed will be taxable.  If you are under age 59½ at the time of the return of contribution, the taxable gains will be subject to a 10% early-distribution penalty.

There is still more than half a year left in 2019, so if you happen to work and and enough in the remainder of 2019 to support the $4,000 contribution for 2019, you can leave the contribution in.