Excess Roth Contribution – take in kind?
We will be withdrawing a 2012 excess roth contribution. Can this be withdrawn “in kind?” Can we transfer the mutual fund to the trust. It was their first Roth contribution so the whole fund can be transferred if “in kind” transfers are allowed.
There is income which is subject to an early distribution tax (under 59 1/2). However, their son is in college. If they use the income earned for his college expenses, can they show it as not subject to the 10% early distribution tax?
Thanks Mary
Permalink Submitted by Alan - IRA critic on Sun, 2013-02-24 16:47
Yes, the distribution can be taken in kind, but the amount must be exact and this depends on the fund distribution fractional shares. If they don’t some shares would have to be redeemed first and cash used to get to the exact amount reflecting the earnings calculation. The qualified higher education expenses can be used to waive the 10% penalty on the earnings on Form 5329.