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Through a mistake, I deposited 2012 IRA contribution ($6,000) to my Vanguard IRA account which is a Rollover from a US Government TSP. IRS has disallowed, naturally, and I am paying the tax due.

OK, we need to back up and find out what the problem is, because there's absolutely nothing wrong with making an IRA contribution to a "rollover" IRA, which is nothing other than a plain old traditional IRA.

I can think of two possibilities that would produce a bill:

1. You (and your spouse, if filing a joint return) didn't have $6,000 of earned income, resulting in an excess contribution and a $360 penalty.

2. You took a deduction for the contribution which wasn't allowed because of the combination of AGI and coverage by a retirement plan.

I would suspect #1 since it seems too early in the underreported cycle for them to be catching #2, but they could be making progress on speeding up that cycle.

So throw out your assumptions and re-read the paperwork, then get back to us.

Rule Your Retirement Home Fool
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