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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76398  
Subject: Re: IRA nondeductible contribution ? Date: 3/17/2000 7:47 AM
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Greetings, Jerdenrk, and welcome. You wrote:

<<These people I know, (Really, it's NOT me, it's someone who wouldn't take my advice to start with) They contributed to a traditional IRA and now realize that their income is too high, so they want to pull it out of the traditional and put it into a ROTH.. The contibution was made this year. Can they do this? Are there any penalties since they have not filed yet or anything.>>

Basically, they have three choices. They may leave the money in the IRA as a nondeductible contribution. No later than April 17 they may withdraw the entire contribution and pay regular income taxes and a 10% penalty (if under age 59 1/2) on any gain. Or, and again no later than April 17, they may have the contribution recharacterized as one made to a Roth IRA and have everything transferred to a Roth. These details are spelled out in IRS Publication 590 (Individual Retirement Arrangements) available at http://www.irs.ustreas.gov/prod/forms_pubs/index.html.

Regards..Pixy
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