Over Contribution In Roth Due To Short Call Option
I transferred $3296.10 into a Roth IRA in early 2008. I then attempted to write covered calls on those securities through a full service brokerage firm. It turned out the calls were not “covered” and after the brokerage firm cancelled the trades, I had a $3641.86 loss that needed to be covered. The firm requested I send them a check for that amount, which I did. I have now contributed $1746 over my allowed amount and must either withdraw that amount to avoid the 6% penalty or pay it each year as a penalty. The account value is $1926. What can be done in this situation?
Permalink Submitted by Denise Appleby on Wed, 2009-04-01 23:56
[quote=”aclary1″]I transferred $3296.10 into a Roth IRA in early 2008. I then attempted to write covered calls on those securities through a full service brokerage firm. It turned out the calls were not “covered” and after the brokerage firm cancelled the trades, I had a $3641.86 loss that needed to be covered. The firm requested I send them a check for that amount, which I did. I have now contributed $1746 over my allowed amount and must either withdraw that amount to avoid the 6% penalty or pay it each year as a penalty. The account value is $1926. What can be done in this situation?[/quote]
You can withdraw the excess amount by the deadline, along with any NIA (defined here http://www.retirementdictionary.com/definitions/netincomeattributablenia ), so as to avoid the 6% penalty
Does that answer your question? I am not sure.