dmertz
Level 15

Retirement tax questions

niel2k, to summarize what kate3116 said, because you will be receiving the corrective distribution in 2020, long after the due date of your 2018 tax return, and are required to pay 6% excess contribution penalties for 2018 and 2019, the corrective distribution is simply a distribution of your $5,500 excess only.  No earnings need to be distributed.

 

The amendment to your 2018 tax return is to add 2018 Form 5329 to calculate and pay the 6%, $330 excess contribution penalty on the $5,500.  You'll have the same penalty on your 2019 tax return because the excess was not removed before the end of 2019.  The regular distribution of $5,500 that Vanguard indicated will eliminate the excess when you file 2020 Form 5329 with your 2020 tax return next year.