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Okay I screwed up
Old 01-26-2013, 11:10 AM   #1
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Okay I screwed up

Okay I screwed up. Somehow I forgot that when my company's stock was acquired early in 2012, my shares were purchased and so I actually had a $10k gain that I didn't remember I had.

The problem is that this puts is over the limit for the Roth IRAs we've already fully funded. We're about $600 and $900 over our limits.

Could someone who's gone through this reassure me that it isn't the end of the world? I know I need to somehow reduce my contributions. Since I did the contributions in December, and immediately put the money into mutual funds, I'll probably have to wait until March, otherwise I'll end up paying a short-term redemption fee. Is there any way to get the custodian to do an in-kind transfer of shares into a traditional (after-tax) IRA?
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Old 01-26-2013, 11:37 AM   #2
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Fix This Roth IRA Mistake Before the IRS Nails You - DailyFinance
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Old 01-26-2013, 12:25 PM   #3
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Yeah I know the broad-brush things I need to do. I suppose my question is more about what Fidelity will do for me, how things like the short-term redemption fee would apply or could be avoided, etc.
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Old 01-26-2013, 12:32 PM   #4
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Not a problem.

See this thread: Stupid Roth mistake
and
Excess Contributions to Roth IRAs

We also overcontributed, but since our Roth IRAs went up something like 20%, we are just going to pay the 6% excise tax and leave it alone. We have to do something about it in 2013 though.
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Old 01-26-2013, 12:46 PM   #5
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Quote:
Originally Posted by bUU View Post
Yeah I know the broad-brush things I need to do. I suppose my question is more about what Fidelity will do for me, how things like the short-term redemption fee would apply or could be avoided, etc.
bUU, I'm not trying to be sarcastic, but if you want to know what Fidelity will do you will probably get a more accurate answer from Fidelity than you will get here.
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Old 01-26-2013, 01:10 PM   #6
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Originally Posted by Rustward View Post
bUU, I'm not trying to be sarcastic, but if you want to know what Fidelity will do you will probably get a more accurate answer from Fidelity than you will get here.
Yeah yeah, but its SAAAAAAAAturday. And Jennifer won't be in her office until MOOOOOONday!
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Old 01-26-2013, 02:10 PM   #7
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Had a very similar problem, although my Roth was not with Fidelity. It's very common and especially about now when people finally have tax figures for the year. The providers all have a simple process to re-characterize and can walk you through it. Call Fidelity and they can tell you exactly what to do. Unless you wait until near the tax filing deadline, this is easy to fix.
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Old 01-27-2013, 06:07 PM   #8
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It was an easy fix. Happened to me in 2008. I called Fidelity and they asked me to fill some form(do not know which one now) and mailed the checks back of $5K/each after selling portion of FCNTX which I had bought at that time. There were no short redemption fee attached with it. After 2008, I contributed to Roth IRA just before filing my taxes to make sure I do not go over the limit.
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Old 01-27-2013, 07:01 PM   #9
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No help to you here, but brought back a memory of 1975 or 76, when IRA's were new and limited to 15% of pay... Somehow we over contributed, and didn't realize we had a problem, until a year later. After the IRS first threatened us with jail and a big fine, neither they, nor our bank could figure out what to do, so we just let the sleeping dog lie.
Not recommended. Some day, we'll probably hear from the IRS about that "extra $2500".
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