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Backdoor Roth IRA - What should I do with Excess Contribution
Background
I went through the process of implementing the backdoor Roth IRA for both my wife and myself. I contributed the max limit to each traditional IRA. I received a 1099-R for myself showing excess of a dollar (rounded up) and my wife's 1099-R shows an excess of $6. Now TT is saying "You Currently have a Penalty". and recommends I remove the excess contribution but the penalty comes out to be 0 in both cases.
Question
- Should I just enter the max contribution limit into TT?
- Should I bother removing the excess contribution?
- What is the long term ramification if I don't remove the excess amount? In other words:
- Will this particular instance come up every every year when filling out taxes?
- Will I get hit with some huge penalty when I finally retire and use the money?
- I can't imagine this is unique to me/us but assuming this is a problem, how do I avoid it in the future? Just contribute $10 under the limit?
Thanks for any help!
‎April 6, 2020
6:52 AM