@Dasstc wrote:
@Opus 17 Yes my 1099-SA amount was exactly the excess contribution. Looks like the additional tax on that amount was almost 50%. I assume 20% is the penalty and the rest is the income tax rate for my tax bracket.
I'm thinking I may keep kicking this down the road, paying the 6% penalty each year. I'll close it out after I reach age 65 when the 20% penalty doesn't apply. I'm only a few years away from that.
You would pay regular income tax, state income tax, and the 20% penalty. It might add up to 50%, depending on your income and what state you live in.
If you stretch it out to age 65, you will pay 6% each year, and you will still pay income tax, you just escape the extra 20%. It may or may not be worth it.
