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taxmap/pubs/p590-010.htm#en_us_publink1000230701

When Can You Withdraw or Use Assets?(p31)


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You 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 591/2. 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/p590-010.htm#en_us_publink1000230703

Contributions Returned 
Before Due Date of Return(p31)


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previous topic occurrence Contributions Returned Before Due Date of Return next topic occurrence

If you made IRA contributions in 2009, 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.
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 2009 that are returned to you, use Worksheet 1-4. See Regulations section 1.408-11 for more information.
taxmap/pubs/p590-010.htm#en_us_publink1000230704
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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 Determining the Amount of Net Income Due To an IRA Contribution and Total Amount To Be Withdrawn From the IRA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 2010 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/p590-010.htm#en_us_publink1000230706

Example.(p32)

On May 1, 2010, when her IRA is worth $4,800, Cathy makes a $1,600 regular contribution to her IRA. Cathy requests that $400 of the May 1, 2010, contribution be returned to her. On February 2, 2011, 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 2010 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 1, 2010, contribution is $75 ($400 x ($7,600 – $6,400) ÷ $6,400). Therefore, the total to be distributed on February 2, 2011, is $475. This is shown on the following worksheet. taxmap/pubs/p590-010.htm#en_us_publink1000230707
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Worksheet 1-4. Example—Illustrated

1. Enter the amount of your IRA contribution for 2010 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/p590-010.htm#en_us_publink1000230709

Last-in first-out rule.(p32)


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If 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/p590-010.htm#en_us_publink1000230710

Earnings Includible in Income(p32)


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Earnings Includible in Income

You 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.
EIC
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/p590-010.htm#en_us_publink1000230714

Early Distributions Tax(p32)


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previous topic occurrence Penalty, Early Distributions from IRAs and Plans next topic occurrence

The 10% additional tax on distributions made before you reach age 591/2 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 591/2 rule, it will be subject to this tax. See Early Distributions under What Acts Result in Penalties or Additional Taxes, later.
taxmap/pubs/p590-010.htm#en_us_publink1000230716

Excess Contributions Tax(p33)


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Excess Contributions Tax

If any part of these contributions is an excess contribution for 2008, it is subject to a 6% excise tax. You will not have to pay the 6% tax if any 2008 excess contribution was withdrawn by April 15, 2009 (plus extensions), and if any 2009 excess contribution is withdrawn by April 15, 2010 (plus extensions). See Excess Contributions under What Acts Result in Penalties or Additional Taxes, later.
Deposit
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.
taxmap/pubs/p590-010.htm#en_us_publink1000240606

Tax-Free Withdrawals of Economic Stimulus Payments(p33)


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Tax-free Withdrawals of Economic Stimulus Payments

You may have chosen to withdraw an economic stimulus payment that was directly deposited to your IRA in 2008. If you chose to withdraw any or all of the payment, that portion of the payment is treated as neither contributed nor distributed from your IRA. The amount withdrawn is not included in your income and is not subject to additional tax or penalty. The withdrawal must have been made by the due date for filing your 2008 tax return, including extensions. For most people that would have been April 15, 2009.
If the withdrawal was made in 2009, you will receive a 2009 Form 1099-R showing the amount of the distribution. Include the distribution on Form 1040, line 15a; Form 1040A, line 11a; or Form 1040NR, line 16a. Do not make an entry on Form 1040, line 15b; Form 1040A, line 11b; or Form 1040NR, line 16b, but enter "ESP" in the space next to the line.