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Level 2

Question

Excess Roth IRA Contribution in 2020

Forum|Forum|4 years ago
March 10, 2022
7 replies
19 views

I made an excess Roth IRA contribution in 2020. In early 2021 I was able to remove $6,800 + interest prior to the tax deadline. I received my 1099-R in 2022 and now find I should have removed the remaining $200 as I still have an overage showing on my 2020 amended return due to the interest on the $6,800. It is now March 2022. I have already maxed my Roth IRA contribution for 2021 and I am unable to contribute in 2022 because I retired. Any ideas as to how to resolve the issue of the $200 overage for 2020 would be most appreciated. Thanks!

Not A Product Question

Level 11

One option, given the dollar amount of the excess, is to just pay the penalty. The excess contribution penalty is equal to 6 percent of the excess amount. The penalty for excess contributions continues every year that you don't correct the excess contribution. In your case, it appears you will owe the 6 percent penalty on $200 for each year the excess remained in the account which appears to be two years.

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colalAuthor

Level 2

Thank you for a reply. I have no problem paying the penalties. But then how do I remove the $200 excess just take a normal distribution of $200 now?

Thanks again!

Employee Tax Expert

Employee Tax Expert

Yes, you will remove the $200 (without earnings) as a regular distribution.

You will have to pay the 6% penalty for 2020 and 2021 since the excess wasn't removed by December 31, 2021.

@colal

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