Dear Liz: When I retired, I had a small 401(k) with about $12,000 in it. Instead of rolling that money into an IRA, I took a distribution and paid taxes on it. I had no immediate need for the remaining funds, so eventually I opened a new IRA account and deposited the money.<\/p>\n
I now realize I should have put it in a Roth IRA so I wouldn\u2019t face double taxation on the money. This is the stupidest thing I\u2019ve done in recent memory. Is there any legal mechanism I can use to get that money out and into a Roth without paying taxes the second time?<\/p>\n
Answer: You made a mistake, but probably not the one you think.<\/p>\n
You can\u2019t contribute to an IRA \u2014 or a Roth IRA, for that matter \u2014 if you don\u2019t have earned income. So if you\u2019ve fully retired, you should contact your IRA administrator and let them know you need to withdraw your \u201cexcess contribution\u201d as well as any earnings the contribution has made.<\/p>\n
If you contributed this year, you have until your tax filing deadline \u2014 typically April 15, 2026 \u2014 to remove the funds without penalty. If you contributed in a previous year, you\u2019ll typically face a 6% excise tax for each year the money remained in your account.<\/p>\n
Now, a warning about financial mistakes: They tend to become more common as we age. That can be incredibly unsettling, especially to do-it-yourselfers used to handling finances competently on their own. Retirement is a good time to start implementing some guardrails to protect ourselves and our money.<\/p>\n
Hiring a tax pro would be a good first step. Anything to do with a retirement fund should be run past this pro first to make sure you\u2019re following the tax rules.<\/p>\n
Dear Liz: Your recent column about advanced directives said that people could get a free version at PrepareForYourCare.org. I found there is a charge. Is this for all online directives?<\/p>\n
Answer: Prepare is a free site supported by donations, grants and licensing agreements. If you were asked to pay, you either clicked the donate button or weren\u2019t on the correct site.<\/p>\n
Liz Weston, Certified Financial Planner, is a personal finance columnist for NerdWallet.<\/a> <\/a>Questions may be sent to her at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or by using the \u201cContact\u201d form at asklizweston.com.<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Dear Liz: When I retired, I had a small 401(k) with about $12,000 in it. Instead of rolling…\n","protected":false},"author":2,"featured_media":213269,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[111043,4758,58793,89799,25583,5168,72,111044,2079,68193,16862,10036,1322,111045,35926,35944,31731,41830,32590,111046,176,27450,29193,111047,61,1356,21334,206,60,562,111048,13742,3319,111049,111050,2092,12455,111051,111052,2095,111053,111054,33296,111055,111056,111057,15979,2096,174,175,111058,31745,17316,31747,111059,5066,111060,80,111061,111062,18417,31757],"class_list":{"0":"post-213268","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-45-49-years","9":"tag-bad-news","10":"tag-bankruptcy","11":"tag-beard","12":"tag-bill","13":"tag-budget","14":"tag-business","15":"tag-business-person","16":"tag-businessman","17":"tag-caucasian-ethnicity","18":"tag-computer","19":"tag-crisis","20":"tag-debt","21":"tag-depression-sadness","22":"tag-despair","23":"tag-document","24":"tag-emotional-stress","25":"tag-engineer","26":"tag-eyeglasses","27":"tag-filing-documents","28":"tag-finance","29":"tag-financial-advisor","30":"tag-headache","31":"tag-home-finances","32":"tag-ie","33":"tag-illness","34":"tag-indoors","35":"tag-internet","36":"tag-ireland","37":"tag-laptop","38":"tag-lifestyles","39":"tag-loan","40":"tag-manager","41":"tag-mature-adult","42":"tag-mature-men","43":"tag-men","44":"tag-mortgage","45":"tag-mortgage-document","46":"tag-negative-emotion","47":"tag-office","48":"tag-office-worker","49":"tag-one-man-only","50":"tag-one-person","51":"tag-only-men","52":"tag-overworked","53":"tag-paperwork","54":"tag-pc","55":"tag-people","56":"tag-personal-finance","57":"tag-personalfinance","58":"tag-place-of-work","59":"tag-problems","60":"tag-professional-occupation","61":"tag-sadness","62":"tag-surfing-the-net","63":"tag-tax","64":"tag-tax-form","65":"tag-technology","66":"tag-tired","67":"tag-unwell","68":"tag-working","69":"tag-worried"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/213268","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=213268"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/213268\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/213269"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=213268"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=213268"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=213268"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}