Net income attributable to excess Roth contribution
It has been determined that an excess Roth contribution was made for 2017. We have calculated the net income attributable to the excess. Both the excess and the net income will be returned to the IRA owner in 2018. Is the net income attributable to the excess considered 2018 income?
Permalink Submitted by Alan - IRA critic on Tue, 2018-04-03 18:58
The net income is taxable in the year the contribution was made. If the 2017 contribution was made in 2018, then the income will be taxable (and subject to penalty) in 2018. If some of the contributions were made in 2017 and some in 2018, the last contribution made is treated as the contribution returned. The 1099R is coded to specify the year the earnings returned should be reported.