Thanks for the reply! Completely agree with your math for calculating the 6% per year penalty. For the 5329 form, are you saying I need to amend my tax filings for each year (2014, 2015, etc.) or can I somehow do a single amendment for 2019 that calculates the 6% penalty accrued over the years?
The IRS letter said that my custodian submitted a form that I didn't include in my return, which is true since I forgot to include the 1099R for my 2019 tax year. Just looking at the 1099R without the context, the IRS is treating the $16,500 removal of prior years excess contributions as "retirement income" and taxing the full amount as income (it says I owe %5,594 in additional taxes before interest, underpayment penalties, etc.). Nothing in the form specifies that this is removal of prior year contributions.
