@PandaPo wrote:
For 2019 contribution, since I haven't filed 2019 returns yet, I'm working with the banking institute to remove/withdraw $6000 in contribution and any associated earnings. I can then file 1099R using excess contribution for box 1, earnings (calculated from banking institute) for box 2, and code JP box 7, corrected? I will still do the same if it generated a loss?
For 2018 contribution, what can I do if I'm eligible for ROTH IRA contribution for 2020? If I'm not still eligible for 2020, I need to remove/withdraw the 2018 excess contribution and associated earnings correct? What do I need to do/file with my 2019 return to avoid 6% penalty in 2019 and onward?
Was 6% tax on the excess in 2018 already penalized and taken out once I filed 2018 Returns? Or should I be expecting a debt from IRS sometimes down the road?
1) For 2019 correct. For a loss the IRS says:
2) For the 2018 excess, you must report that on your 2018 (or amended 2018) tax return as excess an pay the 6% penalty since it was not removed by the extended 2018 due date.
You can either remove the 2018 excess (not adjusted for any gain or loss) OR if eligible for a 2019 contribution, apply it to 2019 and not remove it. The IRA contribution interview will give you that option.
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
