Funded small IRA w/ ETrade with after-tax money - can I withdraw without penalty?

Submitted by whackbush t3_z7w84c in personalfinance

Just as the title states, AND this account is showing no gains to tax. Well, a gain of $0.76.

Since I used post-tax money to fund this initially, can I withdraw without incurring a penalty? By default, ETrade is stating that my state (AR) initially withholds 5% of these funds but I can decline to do that withholding at the time of transfer. The other ETrade language when performing the withdrawal states that only earnings amounts (gains) will be taxed, but this statement does not detail whether that's state or federal.

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DeluxeXL t1_iy8efiu wrote

Just contact them to reverse the contribution as excessive contribution. Otherwise you won't get the contribution limit back and have to file a few tax forms just to prove that the contribution was aftertax and the withdrawal has no pro rata taxable amount.

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sonnyfab t1_iy8esfu wrote

Is this a traditional or Roth IRA?

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whackbush OP t1_iy8f6vw wrote

Replying to DeluxeXL (#765,448)

I use a financial advisor for nearly all of my money outside of employer's 401K program- this was just a one-off with some cash I had on individual stocks that for some reason I decided to roll into an IRA. It's only $6000 that I put into the IRA last year, and my financial guy didn't spin up any additional IRAs until this year - so that max contribution rules shouldn't be impacted, correct?

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DeluxeXL t1_iy8fiq5 wrote

Replying to whackbush (#765,628)

2021 contributions do not affect 2022 contribution limit, unless 2021 contribution exceeded the 2021 limit. Make sure your MAGI in 2021 was lower than $125k.

Also you need to say "Roth IRA." Otherwise because IRA came first, "IRA" means traditional IRA.

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whackbush OP t1_iy8gifr wrote

Replying to DeluxeXL (#765,712)

"If you file taxes as a single person, your Modified Adjusted Gross Income (MAGI) must be under $140,000 for the tax year 2021 and under $144,000 for the tax year 2022 to contribute to a Roth IRA, and if you're married and file jointly, your MAGI must be under $208,000 for the tax year 2021 and 214,000 for the tax year 2022."
Those were the numbers I was going by. I'm married/joint and wife has no income, but that's definitely something to be aware of. Thanks! I'm staying away from Roths from now on.

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