Basically, I work in a sales position where I receive quarterly commission. It's a new role, so have only been doing this a year, and figured, why not open an Roth IRA with some of the additional dollars. I just closed a deal for the end of the year, though, that will come in through my commissions in November, and put me over the income limit for a Roth IRA.
I was advised to call Vanguard and see what my options were, and basically there are 2:
1- Convert to Traditional IRA (takes time and then would have to open a Roth IRA account to use the backdoor method)
2- Excess contribution removal (he noted this would be the easier way, but as I'm going through the form, I see the below)
Tax information
- Your removal of an excess contribution is considered a distribution and may be subject to taxes and penalties. Under most circumstances, you must report it on your income tax return.
I'd just like to understand if I will be taxed on this, and at what percentage. I've only added in $1,000 last week - and have not placed it in any funds. I actually think they don't fully transfer to my account until tomorrow.
If I'm going to get taxed here, is it better to just convert to a traditional IRA? Would that save me getting taxed on it?
Any help would be much appreciated!
Submitted November 10, 2020 at 07:47PM by InternationalSpare9 https://ift.tt/38vYil1
