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mzeltov
New Member

I had a excess retirement plan contribution returned to me, which I entered. it's showing a larger amount on my taxable income, though. is this an error?

 
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DavidS127
Expert Alumni

I had a excess retirement plan contribution returned to me, which I entered. it's showing a larger amount on my taxable income, though. is this an error?

No, it is probably not an error.  The difference is likely the interest or other income on the excess contribution while it was in your IRA.  You are required to withdraw these earnings along with the excess contribution.  Your IRA trustee would have calculated the earnings amount for you when they processed the withdrawal.

 

You must include these earnings in your income, in the year the excess contribution was made.

 

Click here for the section of IRS Publication 590A that explains how excess contributions and the related earnings are taxed.  The treatment depends on when you withdrew the excess contributions, as compared to the due date of the return for the year the excess contribution was made.

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