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Background: I established a SIMPLE IRA this year for my Schedule C 1099 income. I opened it with the $250 minimum.

Situation: It now appears doubtful that I will have positive income on my Schedule C this year. However, in 2001 I expect to have about $10,000 in net income.

Problem: If it turns out I have 2000 Schedule C income greater than $250, there is no problem. However, if I have negative income from my Schedule C business, what do I do?

What penalties do I owe? Am I able to withdraw the $250 before Dec 31, 2000 without a penalty? How do I handle any earnings? Am I able to "recharacterize" this as a 2001 SIMPLE IRA Contribution?



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