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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: Tax
Satisfied Customers: 577
Experience:  10 years experience
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This is new ...so let me try to explain it. Last year I

Customer Question

Hi Barbara...this is new for me...so let me try to explain it. Last year I rolled over a former employers 401K to a traditional IRA. So, when this was completed...I had a traditional and also a roth. Now...here is where I learned my lesson...I put in $5,500 in both. Then realized oops...so I requested a return from each financial institution of $2,750 in Feb 2016.
1) So since I had $5500 returned (minus loses in the market) do I put down I contributed $2,750 to both the traditional and the roth? Both financial institutions said next year I will see a form that showed my excess contributions were returned.
2) Now...doing my taxes it appears that my income is higher than the phase out of $61-$71K..so the contribution of $2,750 is causing issues? Do I ask for another $2,750 back, essentially putting $0 in the traditional ira? If not, do I just get taxed year after year on this at 6%?
Submitted: 8 months ago.
Category: Tax
Customer: replied 8 months ago.
3) I realized that I will now need to request an additional $ 2,750 from the traditional IRA to avoid the 6% excess contribution since my income is greater than $71K. I do believe if I request this before April 15, that I can update my 2015 contribution and avoid the 6% fee but will have to include any income made off of this contribution.
4) I was hoping by converting the old 401K into a traditional IRA that I could continue to contribute...but now realize my income is higher than $71K and can't do it...bummer...looks like I answered my questions.
Expert:  Barbara replied 8 months ago.

Sorry for the delay in replying--it is tax season!

Since you answered your own question, no need to respond here.

Best regards,

Barb

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