Q.  I accidentally withdrew a large sum of money from my Roth account instead of my regular account: what can I do?

My brokerage account has a regular account and a Roth account. I accidentally withdrew a large sum of money from my Roth account instead of my regular account. It has been over 60 days, and none of the eleven forgiveness exceptions in the IRS code apply to me. Is there anything I can do?

 

A. Sorry to read about the accidental Roth IRA withdrawal.  Unfortunately, I’m not aware of any options you would have to re-deposit the money back into your Roth IRA once you’re past the 60-day window.

The only good news I can give you is that the IRS will consider your contributions to the Roth IRA as the first dollars to be withdrawn.  If you’ve contributed more than the amount withdrawn, it will have no income tax or penalties associated with it.  However, any withdrawal above the amount you’ve contributed would be taxed and penalized unless you are over 59 1/2 years old and have had a Roth IRA open for at least five years.

If you have earned income (but not too much income to be disqualified), you can contribute to a Roth IRA for 2017 (until April 16, 2018) and 2018, so perhaps some of the withdrawal could be reinvested in the Roth via new contributions.

Again, sorry there are no other options for you!

 

John is a CPA and personal finance coach.  Email your questions to john@60minutefinance.com.

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