<< I just learned that the $2000 Roth contribution I made for 1999 is invalid because of my 1999 AGI. This $2000 is now worth $3200 and is part of an account at a mutual fund that also holds my 1998 contribution. If I remove this $3200 from the account, I know I must report the $1200 earnings as regular income. But, is there any penalty? >>You would pay premature distribution penalty on the earnings if you're under 59 1/2.I think a better choice is to "recharacterize" the contribution and earnings as a traditional IRA contribution. That way you can leave it all under the IRA umbrella and pay no tax currently on the earnings. See Form 8606 and its separate instructions. There's also a lot of information about recharacterizations in the FAQ.TMF ExROPhil Marti
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