@KREC wrote:
The 2018 contribution was $2243. $133 was allowed and so I had an overcontribution of $2110. In 2018 I paid the 6% excise tax on the 5329. In 2019 I absorbed $450 paid the 6% again and so
now the overcontribution was reduced to $1660. In 2020
no contribution was allowed so I was hit with and paid 6%. I am now removing the excess contribution in 2021, I assume I only need to
remove the $1660
since portions of the original overcontribution were absorbed.
Paying the penalty does not reduce the excess. The 6% penalty on the original excess amount, repeats each year until that amount is removed. If your 2018 excess was $2,110, then that is what must be removed before Dec 31, 2021 to avoid another $126,60 (6% of $2,110) penalty which is the amount that should have been paid for each year - 2018, 2019 and 2020.
**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.**
