I am currently 58 1/2. If I withdraw an excess contribution for 2020 prior to April 15, 2021, I understand that I will owe a 10% penalty on the earnings. If I leave the money in the account, I will owe a 6% penalty on the amount that is overfunded. IRS document 590-A says:
"Applying excess contributions.
If contributions to your Roth IRA for a year were more than the limit, you can apply the excess contribution in 1 year to a later year if the contributions for that later year are less than the maximum allowed for that year."
The financial institution that has my Roth IRA says they don't report anything beyond the initial funding.
1) How does one report that a contribution in 2020 will be applied to 2021 in TurboTax?
2) If I do this, do I still pay the 6% penalty in 2020?
3) If I take the 6% hit today and hit another limit in 2021 and subsequently remove the amount funded and any earnings in 2022, I would avoid the 10% penalty on earnings since I will be over 59 1/2 and just have to pay the normal tax rate on earnings and that would be a long term capital gain. Is that correct?
