Retirement tax questions

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@PandaPo wrote:

Hi @macuser_22 ,

 

Follow up questions for 2018 excess:

-Since there's no adjustment for any gain or loss, do I just tell my bank to remove/withdraw the exact excess amount?

-And then do I just use Turbo Tax amend option to report the excess amount?

-How and when do I pay 6% penalty? I assume this will be 6% for the year 2018 and 2019?

-Do I need to file any extra forms when filing 2019 Return?

-Is it possible to apply 2018 excess to 2020 contribution?

-What's IRA contribution interview?

 

Thank you!

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For 2018, since it is too late to avoid the 2018  penalty then you just take a regular distribution for the amount of the excess - no less and no more.   The financial institution will report that distribution on a 2020 1099-R form with a box 7 code J if yiu are under age 59 1/2 (or a code Q or T of older than age 50 1/2).  That is reported next year on your 2020 tax return.

Yes, it you are eligible for a 2019 contribution and the 2018 excess would not put you over the limit then it can be applied as a 2019 contribution which will remove the excess.  The IRA Roth contribution  interview has questions about that.

For the 2018 tax return, If you previously entered the Roth contribution in the IRA contribution interview prior to filing the 2018 tax return, then TurboTax should have told yiu that it was an excess and if not remove would have added a 5329 form with the 6% penalty. 

If you did not do that, then you would need to amend 2018 to add it now.  The 29018 5329 form line 23 and the 6% tax on line 23 should be produced.

Enter IRA contributions here:
Federal Taxes,
Deductions & Credits,
I’ll choose what I work on (if that screen comes up),
Retirement & Investments,
Traditional & Roth IRA contribution.

OR  Use the "Tools" menu  (if online version under My Account) and then "Search Topics" for "ira contributions" which will take you to the same place.