Discussion:10% penalty on excess IRA Contributions
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Discussion Forum Index --> Tax Questions --> 10% penalty on excess IRA Contributions
| 21 April 2006 | |
| Hi. I know that when a taxpayer makes an excess contribution to an IRA and takes the excess contribution out before the due date of the return, the 6% excise tax is not applied and the excess contribution is not taxable income. However, the earnings are taxable income for that year. Are the earnings also subject to the 10% penalty?
Thanks! | |
| 23 April 2006 | |
| The earnings are subject to the 10% penalty see Sec. 408(d)(4) and Sec. 72(t)(1). Also, see Pub. 590, page 30. | |
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