Can I Undo an IRA Contribution
If I made an IRA contribution for tax year 2016, but it turned out I made too much to take the deduction, can I take out my contribution by April 15th without penalty? I don’t want to make a non-deductible contribution.
Thank you!
Permalink Submitted by Alan - IRA critic on Wed, 2017-04-05 20:23
If your modified AGI is not too high for a Roth contribution you could recharacterize the contribution as a Roth contribution and any gains already made on the contribution would be Roth gains. Or you could request a return of your TIRA contribution with allocated earnings. The earnings would be taxable in the year in which you made the contribution and subject to 10% penalty. The deadline to withdraw the contribution is 10/15/2017 if you either filed your 2016 on time or filed an extension by 4/18. Otherwise, the deadline is 4/18. This deadline applies to both recharacterizations and returned contributions. Therefore, your best option would be affected by whether you have gains or losses on that contribution. Of course, if your modified AGI is too high for a Roth contribution you should not recharacterize as a Roth as that would create an excess Roth contribution.