Withdraw Roth IRA Contribution Due to Income

Taxes
1

I contributed the full allowed amount to my Roth IRA in 2022 and 2023 before I realized I’m over the joint income limit following marriage (April 2022). My Roth is at Vanguard. The 2022 money was invested in two target date funds. The 2023 money was still hanging out in the settlement fund, not invested yet.

I submitted their online form to withdraw both contributions. Got an email saying they needed more information to process my request. I called and the rep said I needed to withdraw some from the target date funds so that the amount in the settlement fund would equal the contribution from 2022 plus the interest accrued. Around this point I started getting confused—wouldn’t I need to withdraw the entire amount I contributed? The rep was a dude and I’m a woman who’s voice is very uhhh young, so when I asked that question I got a kind of boilerplate explanation of how an IRA works and my infant was getting steadily fussier so I went with it.

Now that I’ve had time to think about it more, I think he just processed the 2022 over-contribution and not the 2023. Am I right that another withdrawal needs to happen to remove the 2023 contribution?

2

It sounds like this is what happened, yes.

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3

If it’s not already been processed instead, you might be able to re-characterize to a traditional ira as a non-deductible contribution (which you will need to track, form 8606).

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4

Closing the loop on this, there was an excess contribution removal in process for 2022, but nothing had been done for 2023. So we did a recharacterization for that contribution. I wish I had done a recharacterization for 2022 instead of an excess withdrawal to my brokerage. Oh well. You live and learn!!

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5

I was just wandering through these archives…
It’s not too late to contribute to your 2022 traditional IRA, you have until April 18. (If I understand correctly - it sounds like you were able to make a partial contribution to your Roth due to income limits and then withdrew the rest. You could contribute the rest of the allowable amount to a traditional IRA, so you total contributions add up to the $6000 total allowed).

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