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Author: AcmeFool Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76395  
Subject: Re: Returning Roth IRA contribution after early Date: 2/17/2008 3:09 PM
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My question is...
Can I take all of the money out of the Fidelity account.(There are no earning just losses, so no taxes. I think only a $15 closing account cost)
Then, as long as this is done before April, open a new 2007 Roth IRA with my bank. I'm pretty sure I can do this much. If anyone foresees a problem please let me know.
So here is the real question, when I open the new 2007 Roth IRA, can I fund it with 4k. Or is my 2007 contribution some how limited to the 3k I took out of the fidelity account?


You have already made your IRA contributions for 2007. You cannot make any more contributions for 2007 regardless of how you handle the rest of this.

If you withdraw your $3000, you will not face any taxes or penalties since it is all contributions at this point and you can withdraw them at any time. However, you cannot then put new money into an IRA and call it 2007 contributions. These have already been made and maxed out.

One thing that seems to be confused here is the idea of pulling money out so that you can make new contributions. It does not work that way. Once you pull money out of a Roth IRA, it cannot be replaced into the account. The only way money can go in is as a new contribution. Since you already made your 2007 contributions, no new money can be put into such accounts and labeled the same way;

If you want to move the account to your bank (personally, I would vote against this in almost every case), then contact the bank and Fidelity to determine how this can be done without ever removing the money from the IRA account.

Acme
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