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Contributed $2000 into existing Roth IRA for year 2000. There were already contributions in account from prior years. I now realize my income for 2000 will exceed Roth limits (mainly due to large lump severence distribution). What should I do now??
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No. of Recommendations: 0
Contributed $2000 into existing Roth IRA for year 2000. There were already contributions in account from prior years. I now realize my income for 2000 will exceed Roth limits (mainly due to large lump severence distribution). What should I do now??

You have two choices. You can withdraw the contribution and the earnings on it. You'll pay tax and the 10% premature distribution penalty on the earnings. The alternative is to recharacterize the contribution and earnings as a traditional IRA contribution for 2000.

You can read about these issues in the FAQ and IRS Publication 590.

TMF ExRO
Phil Marti
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