Deleted
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Post by Deleted on Jul 12, 2011 12:40:44 GMT -5
<< I suggest looking to see if there are any credit unions in your area that you can join. Credit unions pay much better interest due to the different, less stringent regulations. >> Credit unions pay better interest because they are non-profit. On-line banks are for profit, but they do not have the huge expense of physical buildings and so often pay better than credit unions. My credit union is currently paying about 1/17th of 1% interest on savings, though I can get a whole 1/2 of 1% on a CD. I can double that at any on-line bank on a regular savings account, triple it if I am willing to do a CD. Granted, 3 times not much is still not much. Gin, you are mistaken about Roths. Please see www.irs.gov/taxtopics/tc451.html
You do not include in your gross income qualified distributions or distributions that are a return of your regular contributions from your Roth IRA(s). Refer to Publication 590 for additional information on Roth IRA(s). I have read all of that and they are talking about the current year's contribution not prior years. If anyone can point out where they say that you can remove your prior years contributions ok but according to what I was taught and what the tax software does, it has to be 5 years to not get the penalty (or your current years contributions).
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Plain Old Petunia
Senior Member
bloom where you are planted
Joined: Dec 21, 2010 2:09:44 GMT -5
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Post by Plain Old Petunia on Jul 12, 2011 14:03:15 GMT -5
I don't see the words "current year's contributions" in that section, I only see "return of regular contributions". Gin, look at the flowchart for qualified distributions. The flow chart says if your distribution is not a qualified distribution, then the part that is allocable to earnings may be subject to tax and penalty. Nowhere does it say the entire distribution. www.irs.gov/publications/p590/15160x04.gif-755902269.htmlWhen you read the ordering rules, note that your contributions are deemed to come out first. Reading further down, it says your current year's contributions first, your prior contributions second, then any conversions/roll overs, then earnings. This is why you can take a distribution and call it all contributions (provided you have made them, of course), it does not have to be a proportional share of contributions, conversions, and earnings. Which tax software do you use? We use Pro Series in my office.
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Post by Deleted on Jul 12, 2011 14:32:39 GMT -5
I don't see the words "current year's contributions" in that section, I only see "return of regular contributions". Gin, look at the flowchart for qualified distributions. The flow chart says if your distribution is not a qualified distribution, then the part that is allocable to earnings may be subject to tax and penalty. Nowhere does it say the entire distribution. www.irs.gov/publications/p590/15160x04.gif-755902269.htmlWhen you read the ordering rules, note that your contributions are deemed to come out first. Reading further down, it says your current year's contributions first, your prior contributions second, then any conversions/roll overs, then earnings. This is why you can take a distribution and call it all contributions (provided you have made them, of course), it does not have to be a proportional share of contributions, conversions, and earnings. Which tax software do you use? We use Pro Series in my office. I've used noth turbo tax and one I can't remember off the top of my head. When turbo tax and the other one both said I owed the fee, I called the IRS and was told that it was just the current year's contributions unless you have had the account open 5 tax years. I mean, no one has to believe me but I'd rather someone not get dinged on the fee like I did.
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Deleted
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Post by Deleted on Jul 12, 2011 15:01:32 GMT -5
gin, I think you need to have your taxes checked over. There shouldn't be any taxes or penalty on a withdrawal of a Roth contribution unless it was a rollover or conversion.
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Plain Old Petunia
Senior Member
bloom where you are planted
Joined: Dec 21, 2010 2:09:44 GMT -5
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Post by Plain Old Petunia on Jul 12, 2011 15:20:31 GMT -5
<< I've used noth turbo tax and one I can't remember off the top of my head. When turbo tax and the other one both said I owed the fee, I called the IRS and was told that it was just the current year's contributions unless you have had the account open 5 tax years. I mean, no one has to believe me but I'd rather someone not get dinged on the fee like I did. >>
People get bad information from the IRS all the time. They are human too and subject to making mistakes. You should always ask the IRS employee where you can read the information for yourself.
If you have paid a penalty on a Roth withdrawal that included a penalty on your contributions, you should amend your return (if its not too late). You only owe the penalty on the unqualified part.
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