MaryK4
Employee Tax Expert

After you file

An IRA makes a corrective distribution by timely distributing the amount of the excess contribution, together with any accumulated net income attributable to the excess contribution. Timely is the due date for the tax return.  Because you did the distribution in 2022, the excess penalty for 2020 applies.

 

If you withdraw the excess funds by December 31 of the following year you avoid the 6% penalty for the following year.  Since you did not withdraw the excess by December 31 of 2021, you must pay the penalty again in 2021.

 

You will have to amend your 2020 to include the Form 5329 so that you can complete the 5329 for 2021.

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