Discussion:Traditional IRA
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Discussion Forum Index --> Tax Questions --> Traditional IRA
| 1 February 2006 | |
| Have a client who withdrew 24,642 from a traditional ira. Within 60 days he put back 15,000. He also made a deductible contribution of 3,500 to same IRA. He also rolled over into that same IRA 13,223 from an employed retirement plan. No problem with the rollover. That's tax free. However, when someone takes from an IRA there is a 1099R generated. How about when they put some of that money back within 60 days? Wouldn't there be something generated? Also, his Modified AGI is 56,141. I see that he should get no deduction for that 3,500. Is the 15,000 he put back simply treated as if it never left? What form is used to show that? Thanks. | |
| 1 February 2006 | |
| The rollover is no problem. Problem is: Where do I report that 15,000 that he says he put back into the same IRA within 60 days? I tend to smell something here. If he made a distribution of 24,642 back in April 2005 and then within 60 days, put 15,000 of it back, it would seem to me that the 1099R would not even show the 24,642 but instead show the 24,642 minus the 15,000, since the 1099R wasn't generated until after Dec 31. If all that I was told is true, I can understand that putting the 15,000 back into the same IRA from whence it came within 60 days would be treated as tho it never left. But what form would be used to show that? | |
| 1 February 2006 | |
| The 1099-R will show the entire distribution and will probably show code "1" (assuming he is under 59 1/2). The trustee should also issue Form 5498 which reports the FMV at year-end and also should show the activity in the account; e.g. contributions, distributions, earnings, etc. I would ask the client for this form and confirm his assertions. | |
| 12 February 2007 | |
| I have a client who has an earned income of $1,080 for all of '06. He (and his wife) have ample interest income ($9,000+) but they also contributed to a traditional IRA during '06 to the tune of $4,500 each. So, now they are ending up owing Uncle Sam $120 solely due to tax on overage from IRA vs. earned income. Is there anything I can do to help him out of this fix? | |
Death&Taxes (talk|edits) said: | 12 February 2007 |
| They can withdraw their excess contributions by filing date. | |
Biggulping (talk|edits) said: | 1 March 2007 |
| I have a client who withdrew 15,000 form his IRA and had to pay early withdrawal penalty however he returned 3,000 within 4 months on the same tax year.
He received Form 5498 IRA showing the 3,000 in box 2 as "rollover contribution" Where do I show it on his 1040 tax return? Thank you | |
| March 1, 2007 | |
| Well, 4 months is just a tad or maybe two tads beyond the 60 day allowed timeline, so it's all taxable. Can't understand why the 1099R would, oh wait, you said the 5498. Well, that's a totally useless paper except for giving us some clues. All that that means is that it was a rollover contribution to that fund, not that it wasn't taxable. What does the 1099R show? | |
Rgtaxservice (talk|edits) said: | 1 March 2007 |
| After the 15K rollover, 9642 is taxable and also subject to the 10% penalty (unless another exception applies). | |
| March 1, 2007 | |
| RG - Did you subtract 5,498 from 15,000? JR was referring to Form 5498. It still wouldn't add up to $15,000. What was the other $140? :) | |
Biggulping (talk|edits) said: | 1 March 2007 |
| JR1, thank you, 1099-R shows 15,000 box 1 and 2 but my question is: should I just ignore the 3,000 that he returned and shows in box 2 of form 5498 IRA which reads "rollover contribution"? That amount is not going to be applied in AGI line 32 "IRA deduction" Right?
Thank you again | |
| March 1, 2007 | |
| Yeah, it's NOT a rollover for tax. The 1099R is correct as is. And throw the 5498 away like I suggested... | |
| 2 March 2007 | |
| Help, I do not have a 1099R from the client only going ny last summary statement, what do I record on 1040? | |
| March 2, 2007 | |
| Must have the 1099R. Required to efile, and I can't imagine trying to file without it. Like a W2, you have to get it right. It'll answer all your questions. | |
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