Excess Contributions to Roth IRA

[Anonymous]

Hello

I am currently working on filing my taxes for 2019, and I am having some frustrations with TurboTax due to how the Roth IRA excess contributions are being handled.  I currently have the following situation:

During 2019, I realized that my AGI was too high to be eligible for Roth IRA contributions.  However, at the time, I had already contributed $5,000 toward my Roth IRA.  I called the brokerage house and had the amount (plus earnings) re-characterized to my Traditional IRA.  I believe I have all the necessary information fr this entered into TurboTax.

However, after discovering I was not eligible, I realized that my Roth IRA contributions for the following were not allowed:

• 2018 - $5,499.96 - AGI too high
• 2016 - $5,500.00 - Married filing separately (Ohio uses a single tax table regardless of filing status, so you get severely penalized for being married with 2 incomes)
• 2015 - $5,500 - Married filing separately

Due to all of this, I contacted the brokerage house and had the contributions returned to me for a total of $16,500.19 in 3 separate payments during November 2019

Based on my understanding, I should owe the following penalties:

• 2018 - $5,499.96 * 6% * 1 year = $330
• 2016 - $5,500.00 * 6% * 3 years = 990
• 2015 - $5,500.00 * 6% * 4 years  =$1,32

I entered the information fro my form 1099-R into TurboTax, but I must be doing something wrong because I do no get prompted for the tax years these apply to, and the fee is not being calculated on my Form 5329.

For Form 5329, I see the following populated in Part IV:

Line 18 - $16,500

Line 19 - $0

Line 20 - $16,500

Line 21 - $16,500

Line 22 - $0

Line 24 - $0

Line 25 - $0

If anyone has experience a similar issue in the past and can guide me, I would greatly appreciate the help.

[ThomasM125 · Accepted solution]

I would suggest you file amended returns for each year and pay in the penalty year by year. At the top of part IV of form 5329 you are instructed for report information for the current year and carryover information from the previous year. The penalty for 2019 is all that should be reported on the 2019 tax return.

You can prepare amended returns in the online TurboTax for free as follows:

1. Log into your TurboTax program

2. Find "Your Tax Return & Documents" on your home page

3. Click on the "Show" option

4. Select the year you want to amend

5. You will see an option to "Amend(change)" the return for that year.

6. Just follow the instructions to start the amend process.

In the desktop version of TurboTax, look in "Other Tax Situations" for the amend return option

[dmertz]

Your 2019 Form 1099-R is correct, indicating that you no longer have any excess contribution penalty for the $16,500 of excess contributions from 2015, 2016 and 2018.

As indicated by ThomasM125, you must file 2015, 2016, 2017 and 2018 Forms 5329 to calculate and pay the penalties:

• Your 2015 Form 5329 will show a $5,500 excess subject to a $330 penalty.
• Your 2016 Form 5329 will show a $11,000 excess subject to a $660 penalty.
• Your 2017 Form 5329 will show a $11,000 excess subject to a $660 penalty.
• Your 2018 Form 5329 will show a $16,500 excess subject to a $990 penalty.

This totals the same $2,640 that you came up with.

[Anonymous]

I have a questions regarding this.  When I try to go into this section, I can only see returns back to 2016, even though I filed with TurboTax before then.  Is this because the IRS does not accept amended returns longer than 3 years ago?  I've been searching around, and it appears that may be the case.

How would I handle this if I cannot amend my return for 2015?

[dmertz]

Yes, Intuit does not support TurboTax for tax years that are closed for refund.  It's a simple matter to manually prepare the forms for the 2015 excess contribution.

https://www.irs.gov/pub/irs-prior/f5329--2015.pdf

https://www.irs.gov/pub/irs-prior/f1040x--2016.pdf