Publication 590
taxmap/pubs/p590-009.htm#en_us_publink1000230701You can withdraw or use your traditional IRA assets at any time. However, a 10% additional tax generally applies if you withdraw or use IRA assets before you are age
59
1/
2. This is explained under
Age 591/2 Rule under
Early Distributions, later.
You generally can make a tax-free withdrawal of contributions if you do it before the due date for filing your tax return for the year in which you made them. This means that, even if you are under age
591/2, the 10% additional tax may not apply. These withdrawals are explained
next.
taxmap/pubs/p590-009.htm#en_us_publink1000230703If you made IRA contributions in 2012, you can withdraw them tax free by the due date of your return. If you have an extension of time to file your return, you can withdraw them tax free by the extended due date. You can do this if, for each contribution you withdraw, both of the following conditions apply.
- You did not take a deduction for the contribution.
- You withdraw any interest or other income earned on the contribution. You can take into account any loss on the contribution while it was in the IRA when calculating the amount that must be withdrawn. If there was a loss, the net income earned on the contribution may be a negative amount.
Note.If you timely filed your 2012 tax return without withdrawing a contribution that you made in 2012, you can still have the contribution returned to you within 6 months of the due date of your 2012 tax return, excluding extensions. If you do, file an amended return with "Filed pursuant to section 301.9100-2" written at the top. Report any related earnings on the amended return and include an explanation of the withdrawal. Make any other necessary changes on the amended return (for example, if you reported the contributions as excess contributions on your original return, include an amended Form 5329 reflecting that the withdrawn contributions are no longer treated as having been
contributed).
In most cases, the net income you must withdraw is determined by the IRA trustee or custodian. If you need to determine the applicable net income on IRA contributions made after 2012 that are returned to you, use
Worksheet 1-4. See Regulations section 1.408-11 for more information.
taxmap/pubs/p590-009.htm#en_us_publink1000230704 | Worksheet 1-4. Determining the Amount of Net Income Due To an IRA Contribution and Total Amount To Be Withdrawn From the
IRA 1. | Enter the amount of your IRA contribution for 2013 to be returned to
you | 1. | | 2. | Enter the fair market value of the IRA immediately prior to the removal of the contribution, plus the amount of any distributions, transfers, and recharacterizations made while the contribution was in the IRA
| 2. | | 3.
| Enter the fair market value of the IRA immediately before the contribution was made, plus the amount of such contribution and any other contributions, transfers, and recharacterizations made while the contribution was in the IRA
| 3. | | 4. | Subtract line 3 from line 2 | 4. | | 5. | Divide line 4 by line 3. Enter the result as a decimal (rounded to at least three
places) | 5. | | 6.
| Multiply line 1 by line 5. This is the net income attributable to the contribution to be
returned | 6. | | 7.
| Add lines 1 and 6. This is the amount of the IRA contribution plus the net income attributable to it to be returned to
you | 7. | |
|
taxmap/pubs/p590-009.htm#en_us_publink1000230706On May 2, 2013, when her IRA is worth $4,800, Cathy makes a $1,600 regular contribution to her IRA. Cathy requests that $400 of the May 2, 2013 contribution be returned to her. On February 2, 2014, when the IRA is worth $7,600, the IRA trustee distributes to Cathy the $400 plus net income attributable to the contribution. No other contributions have been made to the IRA for 2013 and no distributions have been
made.
The adjusted opening balance is $6,400 ($4,800 + $1,600) and the adjusted closing balance is $7,600. The net income due to the May 2, 2013, contribution is $75 ($400 x ($7,600 – $6,400) ÷ $6,400). Therefore, the total to be distributed on February 2, 2014, is $475. This is shown on
Worksheet 1-4. Example—Illustrated, later.
taxmap/pubs/p590-009.htm#en_us_publink1000230707 | Worksheet 1-4. Example—Illustrated 1. | Enter the amount of your IRA contribution for 2013 to be returned to
you | 1. | 400 | 2. | Enter the fair market value of the IRA immediately prior to the removal of the contribution, plus the amount of any distributions, transfers, and recharacterizations made while the contribution was in the IRA
| 2. | 7,600 | 3.
| Enter the fair market value of the IRA immediately before the contribution was made, plus the amount of such contribution and any other contributions, transfers, and recharacterizations made while the contribution was in the IRA
| 3. | 6,400 | 4. | Subtract line 3 from line 2
| 4. | 1,200 | 5. | Divide line 4 by line 3. Enter the result as a decimal (rounded to at least three
places) | 5. | .1875 | 6.
| Multiply line 1 by line 5. This is the net income attributable to the contribution to be
returned | 6. | 75 | 7.
| Add lines 1 and 6. This is the amount of the IRA contribution plus the net income attributable to it to be returned to you
| 7. | 475 |
|
taxmap/pubs/p590-009.htm#en_us_publink1000230709If you made more than one regular contribution for the year, your last contribution is considered to be the one that is returned to you
first.
taxmap/pubs/p590-009.htm#en_us_publink1000230710You must include in income any earnings on the contributions you withdraw. Include the earnings in income for the year in which you made the contributions, not the year in which you withdraw
them.
| Generally, except for any part of a withdrawal that is a return of nondeductible contributions (basis), any withdrawal of your contributions after the due date (or extended due date) of your return will be treated as a taxable distribution.
Excess contributions can also be recovered tax free as discussed under
What Acts Result in Penalties or Additional Taxes, later. |
taxmap/pubs/p590-009.htm#en_us_publink1000230714The 10% additional tax on distributions made before you reach age
59
1/
2
does not apply to these tax-free withdrawals of your contributions. However, the
distribution of interest or other income must be reported on Form 5329 and,
unless the distribution qualifies as an exception to the age 59
1/
2 rule, it will be subject to this tax. See
Early Distributions under
What Acts Result in Penalties or Additional Taxes,
later.
taxmap/pubs/p590-009.htm#en_us_publink1000230716If any part of these contributions is an excess contribution for 2011, it is subject to a 6% excise tax. You will not have to pay the 6% tax if any 2011 excess contribution was withdrawn by April 17, 2012 (plus extensions), and if any 2012 excess contribution is withdrawn by April 15, 2013 (plus extensions). See
Excess Contributions under
What Acts Result in Penalties or Additional Taxes, later.
| You may be able to treat a contribution made to one type of IRA as having been made to a different type of IRA. This is called recharacterizing the contribution. See
Recharacterizations, earlier, for more information.
|