Excess Roth IRA Contributions 2021 - already filed taxes

[parisrosaries]

We made a Roth IRA contribution at the end of 2021 and just realized this month that we were not eligible to contribute. We have already submitted our taxes for 2021.

We have already filed a form with our brokerage to withdraw the contribution, there were no earnings. We are in the process of filing a tax amendment. The IRS website notes that we have 6 months from the tax filing deadline to remove any excess contribution (i.e. remove by October).

Since we have requested to withdraw excess contributions before October, do we still have to pay the 6% penalty when we amend our 2021 taxes?

[Opus 17]

Did you report the Roth contribution and pay the penalty?  Or did you forget and leave it off entirely?

[fanfare]

@parisrosaries 

you don't pay a 6% penalty because the contribution is undone.

File an amended return with “Filed pursuant
to section 301.9100-2” written at the top. Report any
related earnings on the amended return and include an
explanation of the withdrawal.

Turbotax has a way to add such annotations.

OR, if you can't find the way,

put the annotation in the beginning of your Part III - Explanation when you e-File 1040-X.

[fanfare]

"the distribution of interest or other income (related earnings) must be reported on Form 5329 and,
unless the distribution qualifies as an exception to the age
591/2 rule, it will be subject to this tax (10% early distribution)."