Excess Contributions
Scenario:
Person puts into a traditional IRA contribution in January 2014 and counts the contribution for 2013. They file their taxes and now they change their mind and want to take the money back out of the traditional IRA. Can they do that without this being a distribution?
Permalink Submitted by Alan - IRA critic on Fri, 2014-05-02 20:04
It will be a distribution, but if he requests a return of his 2013 contribution before 10/15 with allocated earnings, only the earnings would be taxable and subject to penalty on the 2014 return. If a deduction was taken for the contribution the 2013 return will have to be amended to eliminate the deduction OR if there was no deduction and a non deductible contribution was reported on Form 8606, there would also need to be an amended return to delete the 8606. If they wanted to make a Roth contribution instead, they could still recharacterize the TIRA contribution without removing it.