HELP! I really messed up. I have a mutual fund account and since I already paid taxes on it, I decided to contribute some money to a ROTH IRA. So instead of writing a check for the amount, I just had the money transferred from my existing acct. I have received a FORM 1009-B and need to know what to do. I don't want to pay taxes on money that was already taxed before. How do I avoid that in the future?

Also, I would like to contribute for the year 2002 (~3K). Can I just write a check for the amount and send it in without penalty?

Thank you in advance for your help.

Barbra

By “existing account” do you mean Roth IRA? 1099-B’s are not issued for IRAs. The 1099-B is issued for cash accounts when a broker exchange occurs (e.g. sale- liquidation). Generally, the amount reported on this form must be reported on your income tax return.

You used the term “transferred”. If you are referring to moving the assets to the Roth IRA, should I assume you mean contribute?

Contributions made to Roth IRAs are never taxed. Only the earnings, if you do not meet certain requirements. Therefore, there will be no double taxation.

In order o contribute for the year 2002, you may write a check for the amount and have it deposited to your Roth IRA as a participant contribution. No penalty will be assessed unless it is determined that you are not eligible to make the contribution, and it therefore becomes an excess contribution and is not removed timely.

See IRS publication 590 , at this URL http://www.irs.gov/pub/irs-pdf/p590.pdf for additional information excess contributions and eligibility requirements for making a Roth IRA contribution

Thanks for the quick response. To clarify things: I had an existing mutual fund account. I opened a new ROTH IRA account and I moved or contributed money from the existing mutual fund account to the new ROTH IRA. I think the mutual fund company has to report such transactions on a FORM 1099-B.

Thanks for the reference to the publication. I'll refer to it any time I have questions.

Regards,
Barbra