Failed Roth Conversion

[JAMES PATRICK]

In reading Pub 590 on p54 it discusses the adverse consequences of a failed Roth conversion that is not recharacterized.

I understand #1 and #2 but am not clear on #3.

"The 10% additional tax on early distributions may apply to any distribution".

The section above it states that the "contribution" will be treated as a regular contribution, which as we know is never subject to tax or penalty. So what distribution MAY be subject to the 10% penalty?

[BPickerCPA]

I don't have the pub in front of me right now, but there are two possibilities for the 10% penalty. One is that the amount that was supposedly converted is now subject to the 10% penalty (if an exception does not apply), since the conversion was not valid. The second possibility is that when the now excess contribution is withdrawn along with the applicable income, the 10% penalty will apply to the applicable income.