Taken out too much Excess Roth IRA contribution

[pgbrite]

Please let me know if you can help me on this:

I am current 29 years old and just notice that I had excess of $100 Roth IRA contribution for 2021 on March 28, 2022.

On March, 2022, I went into Vanguard and did an Excess Roth IRA withdraw of $100 with 500 Index fund "in kind" to my regular brokage account.   Vanguard issued a distribution of $96.84 from my Roth and transferred the shares to my regular brokage account.  So, I am assuming there is a lost with my $100 original deposit.

On April 7, 2022, Accidently I initiated another $200 excess Roth IRA withdraw for 2021 with the 500 Index fund "in kind" to my regular brokage account.  Vanguard issued a distribution of $727.66 from my Roth and transferred the shares to my regular brokage account.

I realized I should not  do the $200 excess Roth withdraw and need to return the $727.66 back to Roth.  How can I fix this mistake ?  Can I deposit the exact amount of $727.66 in mutual fund shares from my regular brokage account back to the Roth account since it is within the 60 days limit?

Thank you

[dmertz]

"On April 7, 2022, Accidently I initiated another $200 excess Roth IRA withdraw for 2021 with the 500 Index fund "in kind" to my regular brokage account.  Vanguard issued a distribution of $727.66 from my Roth and transferred the shares to my regular brokage account."

That doesn't make any sense unless you have a large amount of other investments in the Roth IRA that have had fantastic investment performance.  A $727.66 distribution for a $200 return of contribution in April implies a 275% investment gain in the Roth IRA in a month.  The S&P 500 has gained less than 10% in that time.  Seems more like a $700 return of contribution was requested (or at least that's what was processed).

A return of contribution is not eligible for rollover.  However, if this return of contribution has left you with less than the maximum permissible Roth IRA contribution or 2021, you have until April 18 2022 to contribute the difference.

[pgbrite]

Thank you for your quick reply.  I double check and the request was for $200, maybe vanguard make a mistake and did a $700 return in contribution.  I will call vanguard to verify.  If I leave the excess withdraw at $300 ($200 + $100) and assuming the $27.66 is the dividend/interest.  To create a 1099-R on Turbo tax, Should I use $327.66 with box 1 (Gross distribution) and $27.66 for Box 2a (Taxable amount) ?

Thank you.

[dmertz]

If the gains attributable to the $200 were $27.66, not $727.66, that makes a lot more sense but still represents about a 17% gain between March 28 and April 7, which is still high if your entire investment is in the S&P 500 fund.

Regarding the amount in box 2a of the Form 1099-R, I don't know if the custodian will aggregate the loss on the $100 returned contribution and gain the $200 returned contribution or if they will only show just the gain.  I think they should aggregate the two, but that doesn't mean that they will do that.

[pgbrite]

Vanguard did make a mistake taking out $700 instead $200 as requested.  They will correct the error at this time.  Thank you for all your help on this.