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-   -   Disallowed ira contribution (https://www.askmehelpdesk.com/taxes/disallowed-ira-contribution-319582.html)

  • Feb 19, 2009, 04:47 PM
    nxr56
    Disallowed ira contribution
    I contributed $5000 to an ira for tax year 2006. In 2008 IRS disallowed the deferred tax on that amount because I was covered by an employer plan. I've since paid both federal and state tax on the $5000.

    I now want to withdraw the $5000 tax and penalty free. What forms need to be filled out?
  • Feb 19, 2009, 08:34 PM
    ebaines

    Talk to the custodian of the IRA about making withdrawals. You can make withdrawals if you are over 59-1/2, or if you meet certain hardship crireria. Otherwise you will have to pay the 10% early withdrawal penalty. If you do make a withdrawal, you will owe income taxes on the portion of the withdrawal that is attributable to either pre-tax contributions or the tax-deffered earnings in the account. Unfortunately you can'y just say that the $5K you want to withdraw is the after-tax $5K that's in the plan - per IRS rules the withdrawal is considered to be split between both pe- and after-tax portions.

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