BillM223
Expert Alumni

Get your taxes done using TurboTax

"I made excess contributions prior to 2023 " - What does this mean? For tax year 2022 or before?

 

Any excess contributions for 2022 needed to be withdrawn by April 15, 2023 (or whatever your due date was). They cannot be easily withdrawn after that date. If you did withdraw 2022 excess on April 18, 2024, then the excess would be added to your income and you would be hit with a 20% penalty.

 

Only excess contributions contributed in tax year 2023 could be withdrawn by the April 15, 2024 due date.

 

So, if you had excess contribution prior to 2023 or if you had excess contributions for tax year 2024 and did not withdraw the in a timely manner (April 15th), the a form 5329 should be generated, because any excess that is not withdrawn in a timely manner is carried over to the subsequent year, and you are hit with a 6% penalty (on the 5329).

 

And if indeed, you have a carryover of excess contributions, then you should NOT answer Zero to the question of "Enter last year's excess contribution". This would be an error on your part.

 

The way that carryovers work is that they are applied to the next year as a "personal" contribution on line 2 on the 8889. This is why you can't contribute any more to the current year, because your current may already be max'd out with the carryover.

 

So we need to understand the source of the original excess. Based what you have said so far, it sounds like Turbotax is working correctly.

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