Retirement tax questions

None actually for a 2017 excess contribution not removed.

 

That quote from Pub 590A is in the section "Excess Contributions Withdrawn by Due Date of Return" which for a 2017 contribution was April 15, 2018.    Since you did not and the excess is still there then the 6% penalty applies to 2017 AND again in each year that the excess remains (2018, 2019).    There will be no 2020 penalty if the excess is removed as a normal distribution before the end of 2020.   You need to file a 2017, 2018 and 2019 5329 form for each year showing the excess and pay the 6% penalty.

 

Any earnings attributed to the excess remain in the IRA and do not need to be withdrawn because the 6% penalty must be paid.   Removing and paying tax in the earnings only applies when the excess was timely removed before the due date of the tax return of the tax year that the excess was for.

 

**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.**

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