Hello,
I recently discovered that I accidentally over-contributed to my Roth IRA accounts. In 2021, I contributed $6,000 to both my Charles Schwab and Fidelity Roth IRAs—without realizing I had already maxed out with the first contribution. This means I exceeded the annual contribution limit by $6,000.
I’ve since contacted Schwab to remove the $6,000 excess contribution along with the earnings. However, since the excess remained in the account for multiple years, I understand I may owe a 6% excise tax for each year the excess contribution had been sitting in my account.
Here’s what I think I need to do, and I’d appreciate any confirmation or corrections:
File amended returns (Form 1040-X) for tax years 2021, 2022, 2023, and 2024.
Include Form 5329 for each of those years to calculate the 6% penalty.
Pay any penalties due.
My questions are:
Am I missing any steps or forms in this process?
- Do I need to report the earnings on Form 5329, in addition to the excess contribution?
- Should I add the excess contribution and excess earnings back to my adjusted gross income on Form 1040-X?
For this year (2025), do I need to report the removal of earnings, and how would I do that?
I read that the IRS may waive the penalty in some cases if I provide a reasonable explanation. Has anyone had success with this, and how should I go about requesting the waiver?
Any guidance or shared experience would be greatly appreciated!
