Hi DanaB27,
Thank you for your helpful explanation. I will report the excess contribution as you suggested, and I appreciate your guidance on this matter. However, I still have a few questions I was hoping you could help me clarify.
Firstly, when reporting the excess contribution, should I also correct Box 12 on my W-2 form?
Secondly, I have been having difficulty removing the excess contribution from my account with Fidelity, as they require employer sponsorship which I am unable to obtain. If I am unable to remove the excess amount by April 15th, do I still need to remove it? Alternatively, would it be better to wait until I am 59.5 years old to avoid the 10% penalty? If I remove the excess contribution after I turn 59.5 years old, I believe the following will apply right?
1) I should not be charged the 6% penalty for the excess contribution each year since the IRS will have already charged me for the 2022 tax report.
2) I would only need to pay double tax for the excess contribution, which in my case is $1,300. This means I would need to pay taxes for the year I made the excess contribution as well as for the year in which I remove it.
3) When I remove the excess contribution, I will need to pay taxes on any earnings associated with it
Finally, if I need to remove the excess contribution as soon as possible after April 15th, do you have any suggestions on how to do so? As mentioned earlier, I have been having difficulties removing the excess contribution through the regular process with Fidelity. Would it be advisable for me to remove the excess through an early withdrawal, or are there other options available?
Thank you once again for your assistance!
