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Over funded a Roth IRA but the money is already in stock

Forum|Forum|4 years ago
March 1, 2022
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I'm asking Fidelity the same question but thought I would ask here too.

Turbo Tax tells me the $7000 I put into my Roth IRA for 2021 is too much. I had no "earned income" in 2021 so I need to withdraw the $7000. Lots of problems. The $7000 is already in stock AND the stock has fallen.

If I am able to move the stock out of the Roth IRA, will amount as seen by the IRA be the basis or the value at the time the stock is moved out?

Is there another type of account such as a normal IRA, etc that I can move the money into to help?

Not A Product Question

Best answer by ColeenD3

Transfer the amount "in-kind" to a new or existing (taxable) nonretirement. You need to make sure your broker will allow this.

1. Timely remove excess before the tax filing deadline.

The excess or unwanted IRA contribution amount, plus the net gain or loss, will need to be removed by the tax filing deadline (generally April 15), including an automatic six-month extension. This means the excess should generally be distributed by October 15. If you remove the excess contribution after you file your taxes, you may need to file an amended tax return. If you remove the excess in a timely manner, you will owe tax and, if under age 59½, the IRS 10% additional tax for early or pre-59½ distributions (10% additional tax) on any earnings, not on the excess contribution. See the next page for the IRS-provided formula for calculating the Net Income Attributable (NIA) of either earnings or losses.

Transfer

Excess contibution

ColeenD3

No, If you had no earned income, you can't make any contributions at all. You will need to take out the amount you overcontributed or you will be liable for 6% penalty.

P

pedzAuthor

Yes, I understand that. My question is can I remove the contributions by removing the stock or do I have to sell the stock and remove the money?

ColeenD3Answer

Transfer the amount "in-kind" to a new or existing (taxable) nonretirement. You need to make sure your broker will allow this.

1. Timely remove excess before the tax filing deadline.

The excess or unwanted IRA contribution amount, plus the net gain or loss, will need to be removed by the tax filing deadline (generally April 15), including an automatic six-month extension. This means the excess should generally be distributed by October 15. If you remove the excess contribution after you file your taxes, you may need to file an amended tax return. If you remove the excess in a timely manner, you will owe tax and, if under age 59½, the IRS 10% additional tax for early or pre-59½ distributions (10% additional tax) on any earnings, not on the excess contribution. See the next page for the IRS-provided formula for calculating the Net Income Attributable (NIA) of either earnings or losses.

Transfer

Excess contibution