Been making roth contributions for 6 years while in retirement. Why is there a penalty this year? I did not exceed allowed amount. my income is from IRA and pension.

[Opus 17]

You can't make any IRA contributions (Roth or traditional) unless you have compensation from working.  This generally means wages from a W-2 job or self-employment on schedule C.  Either you had such compensation in the past and don't this year, or you did not report your Roth contributions, so your tax program never had the chance to tell you the contributions were disallowed.

You need to remove the ineligible contributions for 2023 before the April 15 deadline along with any attributable earnings.  The earnings are not taxable if you are over age 59-1/2 but you should report them to avoid problems with the IRS.

If you made excess (ineligible) contributions in the past, you owe a cumulative 6% penalty for each year you made the excess contributions.  You would need to file amended tax returns to calculate and pay the penalties.  Then you can withdraw the excess in 2024 so you won't be assessed further penalties.  If you don't withdraw the excess contributions, and the IRS catches you (which they have apparently not so far), you can be assessed back taxes with interest and additional penalties. 

[nayvman]

I was wondering why after 6 years of using turbotax for over a decade this is first time I've had this penalty?

[Opus 17]

@nayvman 

I couldn’t say. There is no requirement to report Roth contributions on your tax return, unless they are ineligible, so many people simply don’t report them at all in the tax program. In my experience, if you had reported them in the tax program, the program would have flagged them is ineligible, unless you also had some form of compensation on your tax return. But you would have to contact customer support and get them to examine your actual tax data files from previous years to see what, if anything, was different from this year.