@macuser_22 wrote:
#1) You must file a 5329 for for each year starting with a 2014 5329 part IV that would have the 2014 excess and the 6% penalty on that excess. For 2015 file a 2015 5329 with both the 2014 excess and 2015 excess so the 6% penalty will be for both. Likewise for each year 2017-2019 (the 2019 would have the total of 2019 excess and all prior years).
Should the customer wait until the 1099-R is issued on January 31, 2021, to submit the forms 5329 for 2014 through 2018?
If the customer has not filed their 2019 tax return, what do they do about the excess 2019 contribution removed in January 2020?
Also, to the customer: If you mail a series of form 5329s with checks for the penalty amounts, you will still be assessed interest and possibly a late fee. This is hard to calculate so I would not try to add it to your payment now, but I would expect to receive a bill in the future. The interest owed on past-due payments is about 0.4% per month (it's a variable rate and each month has a different rate). There is also a late payment penalty of 0.5% per month with a maximum of 25%. Interest is charged both on the tax that was overdue and the penalty. Once you get the bill for the penalty and interest, you can apply for an abatement of the penalty, although the interest can't be waived by law.
https://www.irs.gov/businesses/small-businesses-self-employed/penalty-relief-due-to-first-time-penal...
