Excess IRA Contribution 2018 – Can I apply this to 2019 contribution and not file 2018 amended return?

Forum|Forum|6 years ago
March 22, 2020
1 reply
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I made a $864 excess IRA contribution in 2018 (in February) because I overestimated my projected self-employment income for that year. I did not know I’d made an excess contribution until I did my 2018 taxes. On April 9, 2019, I took a distribution from my IRA for the excess contribution, plus an additional $2000 (I’m over 59-1/2). I didn’t realize I had to fill out an Excess Contribution Form with my IRA plan administrator. My 2018 Form 5329 shows the $864 excess contribution plus $52 penalty on Lines 15, 16 & 17. I got a 1099-R, treating this as a Normal Distribution in 2019.

Can I apply the $864 toward my 2019 IRA contribution? I’m well under the maximum this year. How do I treat earnings? Is there a way to fill out an Excess Contribution Form in arrears? My plan administrator said they thought not, and to see if a tax person could fix this. I don’t care if I have to pay another $52 penalty, I just want to do this the easiest way possible, and find the amended return process and calculations confusing and overwhelming. Thanks.

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macuser_22

Alumni - Champ

I am not sure I understand all of the question.

If you had a 2018 excess and removed it before the due date of the 2018 tax return then it is no longer in the account and there is no excess.

You should have had it removed as a "return of contribution" and not a normal distribution. I assume that this was a Roth IRA and you received a 1099-R with a code J in box 7. When entering the 2019 1099-R then add the 2018 contribution to your prior years Roth contribution and it will not be taxed.

Since you paid the penalty in 2018 then the earnings on the excess do not need to be removed.

If the excess is still showing in 2019 then go to the IRA contribution interview and make a 0 Roth contribution and walk through you get to the excess carry forward and zero it out to remove it.

[Edited]

**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.**

TrishaMAuthor

Level 2

This was for a Traditional IRA. I cannot find the "excess carry forward" page in Turbo Tax. Is this the page, in the IRA section, that says "Enter excess amount"? Right now that page has pre-populated with $864. Do I enter zero there? Then, where I enter the amount I contributed to my 2019 IRA (I've already contributed $3000), do I change that to $3864 ($3000 current contribution + $864 carry forward from 2018 excess contribution)?