topic How to remove the excess IRA contribution with gain? in Retirement tax questions

How to remove the excess IRA contribution with gain?

Ventura — Mon, 06 Apr 2020 23:29:24 GMT

I opened a new IRA account and made contribution $7,000 to this account in December, 2019. I found the contribution amount is over the limit, I have to remove $4,500 to avoid penalty. There is small amount interest gain in this account. The financial institute said "the amount returned will include any net income (gain or loss) attributable to the excess contribution". How much of the gain shall I remove? All the gain or proportion?

Re: How to remove the excess IRA contribution with gain?

MinhT1 — Mon, 06 Apr 2020 23:48:24 GMT

You should withdraw the earnings related to the excess contribution. Your financial institution must be able to calculate that amount of earnings for you.

Re: How to remove the excess IRA contribution with gain?

fanfare — Tue, 07 Apr 2020 00:06:12 GMT

Since the calculation is very complex it is highly recommended you have the custodian calculate it.

Read what they said, again.

Re: How to remove the excess IRA contribution with gain?

Ventura — Tue, 07 Apr 2020 00:28:56 GMT

I asked, they said, I need talk with tax adviser, they can't tell me how to do it.

Re: How to remove the excess IRA contribution with gain?

fanfare — Tue, 07 Apr 2020 09:28:10 GMT

I suspect any custodian that will take your IRA money is required to do this if requested. There is a form to be submitted, called "Request for Removal of Excess Contribution"

call and ask for the form, or find it on their website.

Re: How to remove the excess IRA contribution with gain?

Ventura — Tue, 07 Apr 2020 18:25:48 GMT

I did summit the form provided by the financial institute. They returned my form said the withdraw amount is wrong, because I didn't include the gain. I call them for the right amount, how to calculate the gain I need to add to the withdraw amount, they didn't give me answer, just said I need talk with tax adviser.