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Greetings, OLF, and welcome. You wrote:

over-contributed to my Roth IRA through Shareholder last year to the tune of $2000. Yep, I wasn't actually authorized to contribute anything. I haven't filed taxes yet due to an extension, and I'm getting prepared in that direction. I have to pay the 6% penalty on my deposit and it's earnings, LOL, which, due to recent times, are quite in the negative.

I don't suppose that since I've taken a loss in my account, that would in some way balance out the deposit that I made? Should I wait to make the withdrawl until the absolute last minute, so that hopefully my account will reach towards where it was previously, or do I take the loss now?

Actually, you have no significant problem here in that you have until the date you must file your return to remove all excess contributions to an IRA. That date applies to extensions for filing beyond the normal date of April 15, 2002. Therefore, you have until the date of your extension to remove the Roth IRA contribution for 2001. In your case, that simply means closing the account in that there will be no earnings to declare. In fact, you may even be able to claim the loss as an itemized deduction in the Miscellaneous area of Schedule A on your return, assuming you itemize and that is the only Roth IRA you have. If the loss exceeds 2% of your adjusted gross income, it becomes deductible.

For details on removing the excess contribution and on possibly claiming a loss when you close the Roth, see IRS Publication 590 (Individual Retirement Arrangements) available for download at

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