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Retirement tax questions
The 6% penalty applies every year until the excess is corrected. By the due date of your 2021 tax return, including extensions, you can ask your Roth IRA custodian to either recharacterize the Roth IRA contribution to be a traditional IRA contribution instead (which may or may not be deductible) or make a return of contribution (with the corrective distribution being adjusted for investment gain or loss). Otherwise you can leave the 2021 contribution as is, pay the 6% penalty for 2021 and either apply the excess as your 2022 contribution, assuming that you will be eligible to make a 2022 contribution of that amount or obtain a regular distribution of exactly the amount of the excess with no adjustment for investment gain or loss.
March 10, 2022
5:31 AM
1,501 Views