I have a small traditional IRA that I cannot deduct any contributions due to coverage by pension plan and income limitations. At this time the majority of the IRA is in CDs. I am looking at purchasing some stock now but don't have enough cash available in my IRA. Can I make a contribution to my IRA, purchase the stock, then in a month or so, when my CDs mature, remove the excess contribution (and any income made by the excess contribution). It would be more than $6000. Thanks, Joe
Intentional excess IRA contribution ?
Feb 14, 2010
1 Replies
"Excess contribution" has a specific meaning: money you could not legally contribute. You don't tell us whether you've made any 2009 or
2010 contributions, but I want to make sure that you know that you can contribute to your traditional IRA even if you can't deduct the contributions. Also, have you considered converting to Roth now that there's no income limit on conversions?All that said, a contribution returned with the earnings by the extended due date of your return never happened. You'll owe tax on the earnings and, if you're under 59 1/2, a 10% penalty on the earnings. See Publication 590.
Phil Marti VITA Volunteer
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