Let's say I contribute to a Roth IRA, and then my income ends up being higher than I expected for the year, above the IRS limits for Roth IRA contributions. I know I can recharacterize to a non-deductible Traditional IRA, but this isn't a very good deal relative to a taxable account, particularly if you already have deducted Traditional IRA money. Is it possible to somehow withdraw the money without any extra taxes or penalties? What if it has increased in value? Also, does it make a difference if I first contributed to a Traditional IRA, deductible because I did not have access to a 401(k), then recharacterized to a Roth IRA because I got access to a 401(k) partway through the year?

  • Why do you think a traditional IRA isnt a very good deal relative to a taxable account?
    – Bishop
    Commented Mar 29, 2016 at 18:32
  • @Bishop: When you withdraw it's taxed at normal income rates instead of capital gains. If you hold a lot of stocks which don't pay high dividends but increase significantly in value, you may have been better off holding them in a taxable account, plus no restrictions on being able to access the money before retirement age.
    – Craig W
    Commented Mar 29, 2016 at 18:40
  • But taxable accounts are taxed before hand... so, making some basic assumptions, you are talking about the difference between $100 growing to $500 and then getting $375 after tax vs $75 after tax growing to $375 minus long term capital gains(likely another 15%).
    – Bishop
    Commented Mar 29, 2016 at 19:07
  • I would have to recharacterize to a non-deductible Traditional IRA though. So it would come down to $75 after tax growing to $375, then $300 after taxes (only the $300 gain is taxed as regular income, I believe) versus in a taxable account, $75 after tax growing to $375 (assuming no dividends), minus 15% capital gains tax = $330. And in the case of a taxable account you can withdraw anytime without penalties.
    – Craig W
    Commented Mar 29, 2016 at 19:54
  • I missed that on my first read through. You are right that for holding no-dividend stocks in a taxable account is better than in a non deductible ira
    – Bishop
    Commented Mar 29, 2016 at 19:59

1 Answer 1


Yes, depending on the timing.

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 59½, the 10% additional tax may not apply. These distributions are explained in Pub. 590-A.

I believe any growth is subject to the 10% penalty:

The 10% additional tax on distributions made before you reach age 59½ 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 59½ rule, it will be subject to this tax.

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