REMOVAL OF EXCESS ROTH CONTRIBUTION PRIOR TO TAX FILING
In January 2022 an individual made a current year Roth contribution. In March 2023 she realizes her income exceeded the limits and removed the excess Roth contribution with a loss. The Roth Custodian is stating the transaction will be reported in 2023 as a prior year removal of excess contribution. Is this correct? Should the client submit anything else with her 2022 tax return regarding the removal of the excess contribution?
Permalink Submitted by Alan - IRA critic on Mon, 2023-03-27 15:28
Permalink Submitted by Bruce Steiner on Wed, 2023-04-19 20:08
What if there’s an excess Roth contribution for 2022 made in January 2023, and withdrawn with the appropriate amount of gain in February 2023? Does the gain go on the 2023 return?
Permalink Submitted by Alan - IRA critic on Wed, 2023-04-19 20:14
Yes, the gain is taxable for the year IN WHICH the excess contribution is made. Further, if there is a gain Sec 333 of Secure 2.0 eliminates the 10% penalty on all corrective distributions of earnings distributed after the date of enactment. The 1099R issued for this in Jan, 2024 should be coded accordingly.