Traditional IRA Contribution and followup withdrawl

[David Scolman]

We made a traditional IRA contribution for my wife, then realized that she had become eligible for a 401K program at her work. We took back the contribution from her IRA and the interest the contribution had made - all within the same year. How do you report that on taxes? We received a 1099-R for the contribution and the interest. Should we report her contribution so that it will net out against the distribution? Thanks.

[ThomasM125]

It depends on the codes on the form 1099-R, but if it ends up being taxable when you enter it in TurboTax, you can make the contribution entry as it may zero out the income. If so, then that would be acceptable.

[fanfare]

Your 1099-R should show taxable amount = the interest you earned, without a checkmark in the "not determined " box.

If not, you did not reverse your IRA contribution correctly.