I am having a similar problem as the original poster and have found the responses to be very helpful. Thank you, @macuser_22 and @dmertz. (I posted my own question regarding this situation yesterday Excess Contributions Roth IRA Married Filing Separately)
I think I am finally starting to grasp how to fix this mess.
I am working on withdrawing my excess contributions for 2017 and 2018 now. I am recharacterizing 2019 contributions to avoid the excess.
I will go back and amend my 2017 and 2018 to claim the penalty for the excess contributions for those years and include the penalty for those years in my 2019 taxes.
The following part of your answer is confusing to me:
"Since the distribution of the excess is a normal distribution and not a "return of contribution" distribution, only the contribution amount itself needs to be removed. The earnings can stay in the account because the penalty has been paid on the 5329 form."
1) Do I not have to pay the 6% penalty on the earnings from the excess contributions? There is no penalty at all on the earnings?
2) Can I keep the earnings in the account and just withdraw the contributions?
"You can always remove your own prior contributions (not previously removed) tax and penalty free."
3) When I withdraw the contributions, I don't pay taxes or a penalty on that withdrawal?
4) If I were to remove the earnings as well, I would have to pay tax and penalty on the earnings on my 2020 return?
Thank you so much in advance!
