how do i remove the penalty on my roth IRA when i only contributed 7K

Forum|Forum|1 year ago
February 24, 2025
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I only contributed 7K to my roth IRA - no withdrawls but i'm getting a penalty. How do i correct this

VolvoGirl

Employee

Did you get any 1099R for a rollover or conversion? You may have also entered that under Deductions. Those don't go under Deductions.

Or you don't have enough earned income to contribute the full amount. Do you have W2 or a Net Profit on Schedule C for self employment? Or you made too much income or have a retirement plan at work. I'm not real clear on how that works.

IRS pub 590A for IRA Contributions
https://www.irs.gov/pub/irs-pdf/p590a.pdf

fanfare

Employee

A penalty applies when you are not eligible for your Roth contribution.

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return of excess contribution:

before tax filing date including extension: positive earnings allocable to the excess are included in income on 1040 Line 4b for the year of the contribution. negative earnings are ignored; in any case, for purposes of basis, consider the original contribution amount as returned.
["Include the earnings in income for the year in which you made the contributions, not the year in
which you withdraw them."]

You must have a) filed by tax day, or b) requested an extension of time to file by tax day to take advantage of the Oct 15 deadline.

positive earnings removed are no longer penalized 10% if you are under age 59 1/2. (eliminated in 2023)

@nicole-huff90

Consult your custodian to obtain the correct removal form for :excess plus earnings".