Hello,
My situation - 55yr old, single, unemployed.
- Made a $7,000 Roth IRA contribution for 2021 Tax year (did this last year April 2022)
- Thought my deferred comp qualified as earned income and I would be able to contribute to the Roth. Turbo Tax didn't pick up it was deferred income because my W2 didn't have anything in Box 12 where I should have made the note it was deferred.
- April 2023 - processing withdrawal/distribution of the entire $7,000 excess contribution. There were no earnings.
- I understand the $7,000 is considered an excess contribution for 2021 Tax Year and I must pay the 6% penalty.
Question 1: Do I also need to pay the 6% penalty on my 2022 tax year? I wasn’t sure if that penalty is assessed if I withdraw the money by April 18, 2023. Or because the money was still in the account on Dec 31, 2022 it triggers the 6% penalty.
Q2: How do I pay the penalty for Tax Year 2021?
Q3: When do I need to pay the 6% penalty for Tax Year 2021? Is there a time limit?
Thank you.
