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M
Mohamed
Level 5
January 20, 2022
Question

Simple IRA distribution same year contributed

  • January 20, 2022
  • 2 replies
  • 6 views

I have a client who withdraws $10K from his Simple IRA plan, he contributed $9500 the same year, so basically he only withdraw $500 more than he contributed, any way he can avoid the 10% excess tax? 

This topic has been closed for replies.

2 replies

BobKamman
BobKamman
Level 15
January 20, 2022

Was the contribution within 60 days of the withdrawal?  

    M
    MohamedAuthor
    Level 5
    January 20, 2022

    I don't have this info, i have the contribution amount from the W2 and withdrawal amount from the 1098R

    qbteachmt
    qbteachmt
    Level 15
    January 21, 2022

    You cannot Net them against each other. Make sure to understand what are the distribution/withdrawal provisions first, for this person and for that account (because you stated SIMPLE IRA and there is a 25% tax potential) in addition to the 10% penalty you mentioned:

    https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-iras-distributions-withdrawals

    Bob's question relates to the rollover provision. But contributions through the paycheck year are not likely to meet the rollover provision. You'll have to research the details to see what applies per this person's activities.

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