@Fanatic wrote:
- 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?
Yes, you should remove the $6 or it will repeat every year until removed. Ask for a "return of excess contribution".
If you leave it in and to not convert the $6 to a Roth then it will mess up the backdoor Roth calculations (there will still be money in the Traditional IRA at years end so the non-deductible basis must be prorated.)
If you convert all of the Traditional IRA including the $6, then the $6 will be taxable income plus it will continue to be an excess every year until removed.
It does not show a penalty now if you choose to leave it in because 6% of $6 is 36 cents that rounds to zero, but I would remove it now (before the July 15 due date) to avoid having to deal with it in the future .
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
