Phil Marti wrote:
- quote -

I have to differ with Phil. Any return of a contribution
that is made before the due date of the tax return is
considered to be a contribution never made (this rule
applies to Roth & Traditional IRAs).

To make this a nice clean transaction, one should withdraw
the $2000 plus any earnings. One could then deposit another
$2000 to the Roth IRA with impunity. The earnings are
subject to tax. They are also subject to the 10% penalty if
the taxpayer has not reached age 59 1/2.

The 1099-R should reflect the full distribution. The taxable
amount would just be the earnings. I would also attach a
statement that explains the complete transaction and
documents that only $4000 or whatever was contributed..

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"BeachTax" <aplanforlife[at]yahoo.com> wrote:

- quote -

It would be an excess contribution. Note the ordering rules
on nonqualified distributions. They come first from
contributions, so if the $2,000 hadn't been contributed, it
wouldn't be there to withdraw.

--
Phil Marti
Clarksburg, MD

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Here's the situation, client makes full 2006 Roth
contribution in January. Due to cashflow issues he withdraws
$2000 in July. Question is, can he replace the $2000 in his
Roth account this year, or would that be considered an
excess contribution?

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >