excess contribution to IRA

Forum|Forum|2 years ago
August 7, 2023
1 reply
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I retired and no longer earn wages. Yet I still made contributions to my traditional IRA in 2020 and 2021. I realized my mistake and withdrew the excess contributions on 02/14/2023. What should I do now? I need your advice. Thanks.

Best answer by fanfare

you have to file 2020, 2023 and 2023 amendments with 2020 Form 5329 and with 2021 Form 5329 showing the excess and paying the penalty

your 2023 Form 5329 will show the excess resolved by removal since you did it in 2023.

return of excess contribution:

after tax due date including extensions: you distribute the excess amount being carried forward on 5329,
(or offset it with currently allowed contribution) .

Earnings stay in the Roth account.

@JGH1976

fanfareAnswer

Level 15

you have to file 2020, 2023 and 2023 amendments with 2020 Form 5329 and with 2021 Form 5329 showing the excess and paying the penalty

your 2023 Form 5329 will show the excess resolved by removal since you did it in 2023.

return of excess contribution:

after tax due date including extensions: you distribute the excess amount being carried forward on 5329,
(or offset it with currently allowed contribution) .

Earnings stay in the Roth account.

@JGH1976

fanfare

Level 15

If you are a desktop program user and still have the sofware installed for those years, you can use it,

if you are an Online user, you have to ask TurboTax Support to give you software for 2020 and 2021.

OTHERWISE,

You must be very familiar with Form 1040-X, or able fo become familiar quickly, to do it manually.

The penalty from Form 5329 goes on Form 1040-X line 10. Col B.

adjust the subsequent lines 11-20 to show that you owe that much more money.

When mailing 1040-X, do not include your old 1040 nor your revised 1040 because the Form 1040-X reflects any changes there and becomes your new tax return.

Therefor your amendment is two forms, Form 1040-X and Form 5329.

@JGH1976