I just learned that my 2004 and 2005 Roth IRA contributions are not allowed because my income exceeds the limits. Can I just withdraw the contributions plus earnings without penalty?

By Denise Appleby AAA
A:

The 2004 excess amount to your Roth IRA would have to be removed by October 15, 2005, to avoid the 6% penalty (assuming that you filed your tax return or filed for an extension on April 15, you receive an automatic extension to October 15, 2005 to remove excess amounts).



You have until October 15, 2006, to remove the 2005 contribution.



If you remove the excess amount plus any earnings or minus any losses by the deadline, your tax preparer will need to amend your return to remove the 6% penalty.



<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /?>



For more on this, read Correcting Ineligible (Excess) IRA Contributions - Part 1, Part 2 and Part 3.



This question was answered by Denise Appleby
(Contact Denise)



RELATED FAQS

  1. Is a Locked-in Retirement Account (LIRA) protected from creditors?

    Learn about how Canadian registered pension and retirement plans are protected from creditors under federal and provincial ...
  2. What are the restrictions for withdrawing my Locked-in Retirement Account (LIRA) ...

    Learn about Locked-in Retirement Funds and options available for receiving retirement income. Explore circumstances when ...
  3. What is the Superintendent's Register of Authorized Institutions?

    Learn who governs locked-in retirement accounts and other registered retirement savings plans in each Canadian province and ...
  4. How can I change my name on my Social Security card?

    Learn what documents are needed to change your name on your Social Security card whether you are a natural-born or foreign ...
RELATED TERMS
  1. Elder Care

    Elder care, sometimes called elderly care, refers to services ...
  2. Gold IRA

    Definition of Gold IRA
  3. Eligible Transfer

    An IRS-allowed movement of assets into or out of an individual ...
  4. Death Master File (DMF)

    Also known as Social Security Death Index. A list of people whose ...
  5. Leveraged Benefits

    The use – by a business owner or professional practitioner – ...
  6. Peri-Retirement

    A term for the period of time leading up to actual retirement. ...
comments powered by Disqus
Related Articles
  1. The Right Place To Retire
    Retirement

    The Right Place To Retire

  2. Closing In On Retirement? Read These ...
    Investing Basics

    Closing In On Retirement? Read These ...

  3. Self-Directed IRA: The Right Move For ...
    Retirement

    Self-Directed IRA: The Right Move For ...

  4. 9 Reasons You May Never Retire
    Retirement

    9 Reasons You May Never Retire

  5. Top 10 Money Mistakes New Parents Make
    Personal Finance

    Top 10 Money Mistakes New Parents Make

Trading Center