Search found 25 matches

by mask107
Wed Apr 19, 2017 7:10 pm
Forum: Personal Finance (Not Investing)
Topic: Should I take 6% penalty for excess Roth IRA contribution since I had significant earnings?
Replies: 77
Views: 5628

Re: Should I take 6% penalty for excess Roth IRA contribution since I had significant earnings?

3) That said, several recent posts suggest that the OP may have a very small ($80?) TIRA pre tax balance AND/OR may be in the 0 or 10% bracket in 2017. If that turns out to be the case this is a rather unique fact pattern , and the recommendation to remove the excess amount without earnings becomes...
by mask107
Mon Apr 17, 2017 1:43 am
Forum: Personal Finance (Not Investing)
Topic: Should I take 6% penalty for excess Roth IRA contribution since I had significant earnings?
Replies: 77
Views: 5628

Re: Should I take 6% penalty for excess Roth IRA contribution since I had significant earnings?

I just checked and it is a rollover IRA with a total of $80. If I convert my roth IRA by recharacterization, does the whole $50000 turn into a new IRA? And what happens to the $2300 in earnings or so? And there is no rush to do this before the deadline? And how do I switch this back to a roth IRA??...
by mask107
Sun Apr 16, 2017 11:23 pm
Forum: Personal Finance (Not Investing)
Topic: Should I take 6% penalty for excess Roth IRA contribution since I had significant earnings?
Replies: 77
Views: 5628

Re: Should I take 6% penalty for excess Roth IRA contribution since I had significant earnings?

I just checked and it is a rollover IRA with a total of $80. If I convert my roth IRA by recharacterization, does the whole $50000 turn into a new IRA? And what happens to the $2300 in earnings or so? And there is no rush to do this before the deadline? And how do I switch this back to a roth IRA??!...
by mask107
Sun Apr 16, 2017 3:56 am
Forum: Personal Finance (Not Investing)
Topic: Should I take 6% penalty for excess Roth IRA contribution since I had significant earnings?
Replies: 77
Views: 5628

Re: Should I take 6% penalty for excess Roth IRA contribution since I had significant earnings?

I agree with others that recharacterization looks like the best choice in your circumstances but I want you to understand why. (Spirit Rider's post at 10:35am showed the lowest cost except for the last method that you aren't eligible for because you don't have wages in 2017. In addition it has the ...
by mask107
Sat Apr 15, 2017 8:10 pm
Forum: Personal Finance (Not Investing)
Topic: Should I take 6% penalty for excess Roth IRA contribution since I had significant earnings?
Replies: 77
Views: 5628

Re: Should I take 6% penalty for excess Roth IRA contribution since I had significant earnings?

For the wiki article, I think I want to show which method is best for which situation(s). For example: The Withdrawing excess by due date of return is best for those with little or no gains. The Recharacterization is best for those for whom Roth conversions are good choices (little or no non-Roth I...
by mask107
Sat Apr 15, 2017 12:03 am
Forum: Personal Finance (Not Investing)
Topic: Should I take 6% penalty for excess Roth IRA contribution since I had significant earnings?
Replies: 77
Views: 5628

Re: Should I take 6% penalty for excess Roth IRA contribution since I had significant earnings?

But I have to do it by 10/2017 and not 12/2017? Is there anything I can do now before 4/18/2017 to help my situation, or is it all the same regardless? You have already filed your 2016 return, so there would be nothing gained by filing your amended return before 4/18/17. In fact, most tax professio...
by mask107
Fri Apr 14, 2017 11:06 pm
Forum: Personal Finance (Not Investing)
Topic: Should I take 6% penalty for excess Roth IRA contribution since I had significant earnings?
Replies: 77
Views: 5628

Re: Should I take 6% penalty for excess Roth IRA contribution since I had significant earnings?

1. If you choose to leave the excess contribution in the Roth IRA, you will have to file a 2016 1040X amended return with a Form 5329 by 10/16/2017 . This will report the excess contribution and calculate the 6% excise tax ($5,500) * 0.06 = $330. Wait, I have to pay the 6% excise penalty twice if I...
by mask107
Fri Apr 14, 2017 10:22 pm
Forum: Personal Finance (Not Investing)
Topic: Should I take 6% penalty for excess Roth IRA contribution since I had significant earnings?
Replies: 77
Views: 5628

Re: Should I take 6% penalty for excess Roth IRA contribution since I had significant earnings?

First of all, just catching up on this thread that has apparently blown up somewhat due to my recommendation yesterday, I would like to clarify some things: 1) First, thanks to Spiritrider for his tax code documented explanation why the distribution of the excess amount without earnings this year i...
by mask107
Fri Apr 14, 2017 10:18 pm
Forum: Personal Finance (Not Investing)
Topic: Should I take 6% penalty for excess Roth IRA contribution since I had significant earnings?
Replies: 77
Views: 5628

Re: Should I take 6% penalty for excess Roth IRA contribution since I had significant earnings?

3. When you filed your taxes, please clarify what you mean by reporting a Roth contribution of 0. It doesn't make sense that someone who is not contributing to a Roth would even be answering a question about Roth. What question(s) were you answering about Roth? Like I said, I made an error and repo...
by mask107
Fri Apr 14, 2017 10:12 pm
Forum: Personal Finance (Not Investing)
Topic: Should I take 6% penalty for excess Roth IRA contribution since I had significant earnings?
Replies: 77
Views: 5628

Re: Should I take 6% penalty for excess Roth IRA contribution since I had significant earnings?

3. When you filed your taxes, please clarify what you mean by reporting a Roth contribution of 0. It doesn't make sense that someone who is not contributing to a Roth would even be answering a question about Roth. What question(s) were you answering about Roth? Like I said, I made an error and repo...
by mask107
Fri Apr 14, 2017 10:11 pm
Forum: Personal Finance (Not Investing)
Topic: Should I take 6% penalty for excess Roth IRA contribution since I had significant earnings?
Replies: 77
Views: 5628

Re: Should I take 6% penalty for excess Roth IRA contribution since I had significant earnings?

celia wrote:Mask, I will respond in a few hours and am in contact with Alan. We will try to show you your options and the associated "cost" of each choice. Will be back..


Thanks!
by mask107
Fri Apr 14, 2017 8:26 pm
Forum: Personal Finance (Not Investing)
Topic: Should I take 6% penalty for excess Roth IRA contribution since I had significant earnings?
Replies: 77
Views: 5628

Re: Should I take 6% penalty for excess Roth IRA contribution since I had significant earnings?

Let's start with some more clarification. Mask107, Are we to assume: 1. You already had about $40,000 in your Roth before you made the contribution and that it was a combination of contributions and earnings. Further, the account is currently worth $50,000 with the Excess Contribution and further g...
by mask107
Fri Apr 14, 2017 7:16 pm
Forum: Personal Finance (Not Investing)
Topic: Should I take 6% penalty for excess Roth IRA contribution since I had significant earnings?
Replies: 77
Views: 5628

Re: Should I take 6% penalty for excess Roth IRA contribution since I had significant earnings?

We have two on-going discussions - 1. mask107 needs help and is confused on what to do. mask107, Do you need a summary of what to do, or, are you stuck in one particular spot? Don't give up. If the answers are confusing, please let us know and we'll try again. There are 3 distinct areas which have ...
by mask107
Fri Apr 14, 2017 1:42 pm
Forum: Personal Finance (Not Investing)
Topic: Should I take 6% penalty for excess Roth IRA contribution since I had significant earnings?
Replies: 77
Views: 5628

Re: Should I take 6% penalty for excess Roth IRA contribution since I had significant earnings?

I only contributed once to any IRAs and the reason it was not allowed was because my magi was too high. All of it has been earned income That's great. You're eligible for Traditional IRA contribution. Recharacterization would work well to avoid your Roth IRA excess contribution. If you were covered...
by mask107
Fri Apr 14, 2017 1:30 pm
Forum: Personal Finance (Not Investing)
Topic: Should I take 6% penalty for excess Roth IRA contribution since I had significant earnings?
Replies: 77
Views: 5628

Re: Should I take 6% penalty for excess Roth IRA contribution since I had significant earnings?

What are the steps to recharacterize a Roth IRA? And should I take action before the tax deadline or wait until it has passed? If you file by April 18, you can still recharacterize by October 15. Vanguard now does this by phone. Call them up, the same as if you were removing the Excess Contribution...
by mask107
Fri Apr 14, 2017 12:52 pm
Forum: Personal Finance (Not Investing)
Topic: Should I take 6% penalty for excess Roth IRA contribution since I had significant earnings?
Replies: 77
Views: 5628

Re: Should I take 6% penalty for excess Roth IRA contribution since I had significant earnings?

I am so confused lol. I'll just withdraw it then If you expect no income for 2017 tax year, why not consider recharacterizing your 2016 Roth IRA contribution to a 2016 Traditional IRA contribution? Once the recharacterization is complete, convert it back to Roth IRA. The conversion is taxable in 20...
by mask107
Fri Apr 14, 2017 12:29 pm
Forum: Personal Finance (Not Investing)
Topic: Should I take 6% penalty for excess Roth IRA contribution since I had significant earnings?
Replies: 77
Views: 5628

Re: Should I take 6% penalty for excess Roth IRA contribution since I had significant earnings?

I am so confused lol. I'll just withdraw it then If you expect no income for 2017 tax year, why not consider recharacterizing your 2016 Roth IRA contribution to a 2016 Traditional IRA contribution? Once the recharacterization is complete, convert it back to Roth IRA. The conversion is taxable in 20...
by mask107
Thu Apr 13, 2017 11:29 pm
Forum: Personal Finance (Not Investing)
Topic: Should I take 6% penalty for excess Roth IRA contribution since I had significant earnings?
Replies: 77
Views: 5628

Re: Should I take 6% penalty for excess Roth IRA contribution since I had significant earnings?

Many thanks to all of you, especially Alan. Cheers. I will withdraw near December in 2017
by mask107
Thu Apr 13, 2017 8:12 pm
Forum: Personal Finance (Not Investing)
Topic: Should I take 6% penalty for excess Roth IRA contribution since I had significant earnings?
Replies: 77
Views: 5628

Re: Should I take 6% penalty for excess Roth IRA contribution since I had significant earnings?

Ideally you would work enough in 2017 to have $5500 in earned income. Then you can pay the excess contribution 6% penalty for 2016 and then not make an additional 2017 contribution and use that to right to offset the 2016 excess so the penalty stops after just one year. Then you get to keep all the ...
by mask107
Thu Apr 13, 2017 8:07 pm
Forum: Personal Finance (Not Investing)
Topic: Should I take 6% penalty for excess Roth IRA contribution since I had significant earnings?
Replies: 77
Views: 5628

Re: Should I take 6% penalty for excess Roth IRA contribution since I had significant earnings?

Hi Celia, thank you for answering, but I'm confused by your replies: 1) Leave the amount in and pay the 6% penalty. Then withdraw the excess after a year Why pay a penalty for being late? You'll have to remove it anyway if you didn't have earned income last year. The gains will most likely increase....
by mask107
Thu Apr 13, 2017 6:43 pm
Forum: Personal Finance (Not Investing)
Topic: Should I take 6% penalty for excess Roth IRA contribution since I had significant earnings?
Replies: 77
Views: 5628

Re: Should I take 6% penalty for excess Roth IRA contribution since I had significant earnings?

Hi Alan! Glad you answered! You have been giving great advice in the past and am happy you answered my thread. I was wondering if I wait a year and withdraw the $5500, will I have to pay an extra 10% for early withdrawal? Also do I select the $5500 withdrawal as an excess distribution withdrawal or ...
by mask107
Thu Apr 13, 2017 6:15 pm
Forum: Personal Finance (Not Investing)
Topic: Should I take 6% penalty for excess Roth IRA contribution since I had significant earnings?
Replies: 77
Views: 5628

Re: Should I take 6% penalty for excess Roth IRA contribution since I had significant earnings?

I already had $30000 in the account to work with and I had a really good year. Also I plan to withdraw the excess only a year after and not wait too long
by mask107
Thu Apr 13, 2017 5:56 pm
Forum: Personal Finance (Not Investing)
Topic: Should I take 6% penalty for excess Roth IRA contribution since I had significant earnings?
Replies: 77
Views: 5628

Should I take 6% penalty for excess Roth IRA contribution since I had significant earnings?

I overcontributed by $5500 for tax year 2016 and have until the tax deadline which is in a few days to remove the proceeds. The problem is my earnings on the excess comes out to be $15000 out of a total account value of $50000 after I contributed and when I do the math I would have to pay taxes on $...

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