@Timbo7 wrote:
Not thoroughly knowing the rules for the Roth IRA, we contributed $5,500 to our minor's Roth IRA in 2016. He did not have earned income until 2019. So, my understanding is that we now need to back-file a 5329 for each of those years (2016, 2017, 2018) to show the excess contribution carried year-over-year with the 6% penalty each time. Is this right? We also need to amend his 2019 return (his first ever return) with a 5329. Luckily his income in 2019 and 2020 will wipe out the overage, so we have not removed it.
If the above is correct, can we file all 5329s together and write one check? Do we need to include an additional penalty and interest payment now?
The penalty applies to him, not you. If he did not file tax returns for those year then he need to file now with the 5329 form. If he did file tax returns then he needs to amend those years and include the 5329 and penalty.
If he is qualified to make a 2020 Roth contribution the the excess can be applies as a 2020 contribution, otherwise it mist be removed before Dec 31, 2020 to avoid another penalty.
**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.**
