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Level 1
posted Feb 5, 2022 11:31:12 AM

Don't fully qualify for Roth IRA, but investment lost significant value

For 2021, I don't fully qualify for a Roth IRA, $1530 of the $6000 contribution needs to be withdrawn before the due date of my return. However, that investment has lost over $4000 so I'm trying to determine if I do need to withdraw $1530, or how much to withdraw, and if there is a way to keep my cost basis.

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1 Best answer
Expert Alumni
Feb 5, 2022 11:45:57 AM

Please make sure that you requested a withdrawal of the excess contribution plus earnings with your financial institute to get correctly coded 1099-R. Your financial institution should be able to calculate any earnings or losses.

 

Please see Excess Roth contribution because of MAGI for additional options about your excess contribution.

3 Replies
Expert Alumni
Feb 5, 2022 11:45:57 AM

Please make sure that you requested a withdrawal of the excess contribution plus earnings with your financial institute to get correctly coded 1099-R. Your financial institution should be able to calculate any earnings or losses.

 

Please see Excess Roth contribution because of MAGI for additional options about your excess contribution.

Level 1
Feb 9, 2022 2:01:54 PM

Thanks @Dana, if I recharacterize to a Traditional IRA, can I then do a backdoor Roth IRA?

Expert Alumni
Feb 9, 2022 3:40:30 PM

Yes, at this moment you can roll the recharacterized amount to a Roth IRA. 

 

The Build Back Better plan has provisions to close this loophole, but as of today it has not passed the Senate.