- 2016: Correct, you must file 2016 Form 5329 and pay the 6%, $390 penalty on the $6,500 excess contribution for 2016
- 2017: If you made no new excess contribution for 2017 then you would file 2017 Form 5329 and pay the 6%, $390 penalty on the $6,500 excess contribution, same as for 2016.
- 2018: If you made another $6,500 excess contribution for 2018, bringing your total excess in your Roth IRAs to $13,000, you must file 2018 Form 5329 and pay the 6%, $780 penalty on the combined $13,000 of excess in your Roth IRAs.
- 2019: After obtaining a regular distribution of exactly $13,000 from your Roth IRAs before the end of 2019, your 2019 tax return will include Form 5329 to show the $13,000 of regular distribution reducing your excess to zero and you'll own no penalty for 2019. If your regular Roth IRA distribution is not a qualified distribution, your 2019 tax return must also include 2019 Form 8606 Part III to show that the taxable amount of the distribution is $0.
- The total of the penalties to be paid is $390 + $390 + $780 = $1,560. (If you fail to obtain a distribution of the $13,000 by the end of 2019, add another $780 as the penalty for 2019.)
- Earnings remain in the Roth IRA. Paying excess contribution penalties and the requirement to distribute earnings are mutually exclusive.
‎December 26, 2019
9:27 AM
