Traditional IRA contribution - change my mind

Forum|Forum|5 years ago
March 28, 2021
1 reply
0 views

Hi,

Need some help. Last year, I opened a traditional IRA account and contributed $7K to it. The next week, I changed my mind and withdrew the money. I read that I can change my mind on the contribution and pull the money back out without penalty. I have received my IRA statement from fidelity and it was loaded into turbotax. The system is trying to charge me a penalty for early withdraw. The distribution code on the form is 1-Early distribution (Except Roth IRA). There is a long list of list of exceptions to choose from. Which one do I select in my situation?

thanks

macuser_22

Alumni - Champ

@mrohling wrote:

Hi,

Need some help. Last year, I opened a traditional IRA account and contributed $7K to it. The next week, I changed my mind and withdrew the money. I read that I can change my mind on the contribution and pull the money back out without penalty. I have received my IRA statement from fidelity and it was loaded into turbotax. The system is trying to charge me a penalty for early withdraw. The distribution code on the form is 1-Early distribution (Except Roth IRA). There is a long list of list of exceptions to choose from. Which one do I select in my situation?

thanks

First of all you have 7 days under tax law to revoke a contribution and no form whatsoever should be issued.

Otherwise a "return of contribution" before the due date of the tax return should have a code 8 in box 7 (contribution returned is same year as contributed.)

Contact Fidelity for a corrected 1099-R.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

mrohlingAuthor

Level 2

Hi,

When I put in code "8 - return of contribution taxable in 2020" in box 7, the software calculates an early distribution. Is there another code that refers to what you stated below?

Otherwise a "return of contribution" before the due date of the tax return should have a code 8 in box 7 (contribution returned is same year as contributed.)

thanks

macuser_22

Alumni - Champ

@mrohling wrote:

Hi,

When I put in code "8 - return of contribution taxable in 2020" in box 7, the software calculates an early distribution. Is there another code that refers to what you stated below?

Otherwise a "return of contribution" before the due date of the tax return should have a code 8 in box 7 (contribution returned is same year as contributed.)

thanks

Do you have a 1099-R with a code 8? What is in box 2a?

Box 2a would have any earnings that were returned and that is taxable and subject to the penalty if yiu are under age 59 1/2.

[note answer edited to add information]

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**