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If the earning is not removed by April 15 (I can check the balance of the account), it is safer to extend my filing deadline from April to Oct ? That leaves me more time to remove the earnings.
For the 2023 5329 form,
5329 form for 2023. I should enter both line 20, 21 and line 23 as $0 because there is no excess contribution for year 2023, is that right?
line 18: 3000 ( those are carryover from 2020, 2021, 2022)
line 20: 0 ( we contribute $1000 for 2023, but removed it in April 2024. A little bit confuse. )
line 21: 0 (add line 19 and line 20)
line 22: 3000 ( line 18 minus line 21)
line 23: 0 ( excess contribution for 2023)
line 24: 3000
line 25: 180 ( 6% x 3000 penalty)
"We will pay 10% penalty no matter what (before or after April 15). "
now you are adding yet another complication.
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If there are no earnings , there is no 10% early withdrawal penalty.
If earnings are reported in tax year 2023 or later, there is no 10% early withdrawal penalty.
include those earnings on Form 5329 Line 2 (see instructions)
there is no early withdrawal for 2020-2022 because earnings stayed in the Roth IRA.
I guess I don't need to figure out what I need to pay for the penalty on the earnings. It will show up on the 2024 1099-R form with some boxes are check ( I assume the earning will be removed in 2024). TurboTax will calculate the penalty, is that correct?
"there is no early withdrawal for 2020-2022 because earnings stayed in the Roth IRA."
Can I leave the earning in the Roth IRA account? Do I still pay for the panelty?
Sorry I read it wrong. Please ignore my previous reply.
Earning still need to be removed in 2024 with the excess contribution.
the only earnings to remove, if any, are those allocable to $1,000 2023 contribution.
the custodian knows how to calculate it. She may have had a loss on that money.
Are you saying that she can keep the earning from 2020-2022 in the Roth account?
But she has to remove the earning for 2023, is that correct?
So the 10% penalty is for which year's earning?
I called the Schwab. It was told that they normally remove the earning with the excess contribution if I choose let Schwab calculate the earnings.
If you take out earnings on an excess reported previously on Form 5329, that is an early withdrawal and subject to penalty if your age is under 59 1/2 or you don't meet the 5-year holding requirement.
Do you agree? (you don't have to wade through this entire thread, It's embarrassing)
Thanks for the help.
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