Hi everyone, I’m looking for help with correcting an excess Roth IRA contribution from 2023 that I just discovered in 2025. Here's a summary of my situation:
Filing status: Single
Age in 2025: below 59
2023 Roth IRA contribution: $6,500
Allowed contribution: $1,090
Excess: $5,410 (not caught in my 2023 tax return, and I did not file Form 5329)
2024 Excess Contribution (Fixed, i think...)
In 2024, I over-contributed again by $4,846 but caught the error before filing. I recharacterized the $4,846 plus earnings of $820 by transferring securities worth $5,944.30 to my Traditional IRA. I believe I just need to report this recharacterization on my 2024 tax return (before the April 15 deadline) and I should be fine.
2023 Excess Contribution (Trying to Fix in 2025)
Here’s where I need help:
Since it’s now 2025, I’m told I can no longer recharacterize or withdraw the 2023 excess contribution as a “return of excess” — Merrill Edge (my Roth IRA custodian) says the only option is to take a regular/premature distribution.
Conflicting info: Some reps (TurboTax advisors and Merrill Edge reps) told me:
The entire withdrawal is subject to a 10% early withdrawal penalty.
Others said only earnings are penalized.
Others said the withdrawal of excess contributions is not taxed or penalized at all.
I’m confused: If I take a regular distribution now, do I withdraw just the $5,410 original excess, or should it include earnings/losses? And how will this be taxed and reported on the 1099-R?
Amending 2023 Tax Return:
Since I didn’t report the excess in 2023, should I file an amended 2023 return with Form 5329 and pay the 6% excise tax (~$325)? (some turbo tax advisors told me not to...)
Then, for 2024, I would file Form 5329 again and pay another 6% excise tax (~$325), unless part of the excess is absorbed by 2024 contribution limits (which I didn’t use for Roth due to the income limit).
My Main Questions:
What amount should I withdraw in 2025 — just the excess contribution, or the excess plus earnings?
Will the withdrawal be taxed or penalized? If so, how much?
How do I communicate clearly with Merrill Edge to ensure the 1099-R reflects it correctly (as removal of excess vs regular early distribution)?
Should I amend my 2023 return, and what exactly should I report for 2024?
I’d really appreciate guidance from anyone who’s been through this or has experience correcting Roth IRA excess contributions discovered late. Thanks in advance!
