I made excess contributions to a Roth IRA in 2021, 2022, 2023 and 2024.
I got in touch with Vanguard and had the excesses removed in March along with the NIA from 2024.
I'm working on filling out 5329s for each of those years but I'm confused about the instructions for Lines 1 and 2. I've read through the instructions but I'm not confident that I understand what they want for my scenario.
I guess my questions are these:
-- Line 1 in form 5329 appears to be only the gains I received on the excess contributions I made in 2024. Is that correct?
-- Do I put anything on Line 2 in Form 5329?
-- Do I need to fill out Form 8606 for any or all of the years?
Grateful for any input.
In regard to your 2024 Form 5329, only the amount from box 2 from a code JP 2025 Form 1099-R goes on line 1 of this From 5329 because only taxable amounts are potentially subject to an early-distribution penalty. However, the NIA gains distributed with a return of contribution before the due date of the tax return, including extensions, are an exception to the penalty, so line 2 of the 2024 Form 5329 should show with code 21 the same amount as is on line 1.
[Correction]
Because the excess contributions for 2021, 2022 and 2023 were not corrected until 2025, Part IV of your 2024 Form 5329 will still show the total of these excess contributions which are subject to penalty for 2024. Part IV of the 2025 Form 5329 will need to be prepared to eliminate the excesses carried into 2025 from 2024.
If you were under age 59½ at the time of these distributions or it has been less than 5 years since beginning of the year for which you first made a Roth IRA contribution, 2025 [correction, not 2024] Form 8606 Part III is required to make the distribution of the 2021, 2022, and 2023 excesses nontaxable. Even though they were excess contributions, they added to your basis in Roth IRA contributions which needs to be subtracted from the total of these distributions.
You didn't ask about Part IV of 2021, 2022 and 2023 Forms 5329. These should have been filed and, if were not filed, need to be filed and the penalties paid.
In regard to your 2024 Form 5329, only the amount from box 2 from a code JP 2025 Form 1099-R goes on line 1 of this From 5329 because only taxable amounts are potentially subject to an early-distribution penalty. However, the NIA gains distributed with a return of contribution before the due date of the tax return, including extensions, are an exception to the penalty, so line 2 of the 2024 Form 5329 should show with code 21 the same amount as is on line 1.
[Correction]
Because the excess contributions for 2021, 2022 and 2023 were not corrected until 2025, Part IV of your 2024 Form 5329 will still show the total of these excess contributions which are subject to penalty for 2024. Part IV of the 2025 Form 5329 will need to be prepared to eliminate the excesses carried into 2025 from 2024.
If you were under age 59½ at the time of these distributions or it has been less than 5 years since beginning of the year for which you first made a Roth IRA contribution, 2025 [correction, not 2024] Form 8606 Part III is required to make the distribution of the 2021, 2022, and 2023 excesses nontaxable. Even though they were excess contributions, they added to your basis in Roth IRA contributions which needs to be subtracted from the total of these distributions.
You didn't ask about Part IV of 2021, 2022 and 2023 Forms 5329. These should have been filed and, if were not filed, need to be filed and the penalties paid.
ChatGPT 4o offers to help.
Are you feeling lucky?
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Yes, I can help with that.
Please upload the fillable IRS tax form (PDF), and let me know:
Which fields or boxes you want filled in (e.g., “Line 1 = $12,000”),
Any other details (like name, SSN, etc.) that should go on the form.
Once uploaded, I’ll return a completed version of the form with your values entered.
Yes, I can help fill out Form 5329 (Additional Taxes on Qualified Plans, etc.) based on your specific situation — applying the U.S. Tax Code rules to determine what lines are applicable and what amounts go where.
Which part(s) of Form 5329 apply:
Early distributions (Part I)?
Excess contributions to IRAs (Part III)?
Missed RMDs (Part IX)?
Or other sections?
Your situation details, such as:
Type and amount of retirement distributions
Ages of account holders
Whether distributions qualify for exceptions
Any missed RMD amounts and the year(s) involved
Excess contributions and when they were made or withdrawn
Any previous penalty waivers requested or corrective actions taken
Once you upload the fillable PDF of Form 5329 (or I can use the IRS’s version), I can:
Calculate penalty amounts or exceptions, using the tax code rules
Populate the form correctly
Return the completed PDF or give you the filled line numbers if you prefer to enter them manually
Would you like to proceed with that?
Sounds good — whenever you're ready, just upload the form and provide the details, and I’ll walk you through it or fill it in for you. Let me know how you'd like to proceed when the time comes.
If you post your own completed form(s) 5329, with name and SSN expunged.
some human forum participant familiar with the rules might be willing to tell you whether you got it right.
Thanks dmertz--that's very helpful!
It sounds like I put the NIA of $316 on both lines 1 and 2, along with Code 21.
Part IV looks pretty straight forward. There's some math to do there but the instructions seem clear. I'll do one for each year.
Also will fill out one Form 8606 (2024) for the 21, 22 and 23 portions of the distribution.
Do you recommend I try to tackle this now, or wait until I have the 1099Rs in January?
Thanks fanfare!
I'll work on get some forms put together and will share them here.
I've been poking at some AI tools and have found that helpful but also have gotten some answers that look wrong to me. Here's an example:
There is no need to wait to do the 2013, 2022 and 2023 Forms 5329 Part IV.
I made a mistake in my previous post. Because the correction of the 2021 though 2023 excess occurred in 2025, this distribution will go on your 2025 Form 5329 IV not your 2024 Form 5329. Part IV of your 2024 Form 5329 will still show these excesses subject to penalty for 2024. The 2025 distribution to correct these will be on a code J Form 1099-R that will be reportable on Part III of your 2025 Form 8606. I'll correct my previous post.
AI chatbots almost always provides erroneous information in regard to taxes. Never use them for obtaining tax information. Qualified disaster distributions are not reported on Form 5329. See the instructions for Form 5329.
I found a paragraph (added below) that matches my scenario. It seems to indicate the last round of penalties and taxes on NIA gains would be dealt with on my 2024 amended return. What's your interpretation?
Grateful for your input!
i8606 page 6:
If you timely filed your 2024 tax return without
withdrawing a contribution that you made in 2024, you can
still have the contribution returned to you within 6 months
of the due date of your 2024 tax return, excluding
extensions. If you do, file an amended return for your 2024
tax year with “Filed pursuant to section 301.9100-2”
entered at the top. Report any related earnings on the
amended return and include an explanation of the
withdrawn contribution.
That paragraph only addresses a contribution returned before the due date of the tax return, the contribution made for 2024 in this case. Excess contribution distributed after the due date of the tax return for the year for which the contribution was made is not corrected until the year of the distribution, in this case 2025 for the 2021, 2022 and 2023 excess contributions.
Okay, I think that applies to me. All the excesses were removed in March, so the 2024 contributions at least should be considered corrected before the due date. I assume this means there won't be anything left over to report on the 2025 return. Does that sound right to you?
Grateful for your input!
Sorry, I misread your post. I see what you're saying now. the 21, 22 and 23 excesses carried into this year so another 5329 will have to be filled for those next year.
One last question (hopefully). Do I need to submit 1099Rs along with the 21, 22 and 23 amended returns, or do they just want one for the NIA gains in 2024?
Grateful for your input!
"Do I need to submit 1099Rs along with the 21, 22 and 23 amended returns"
No. These amendments are only to pay the excess-contribution penalties. The code J 2025 Form 1099-R that reports the distribution of these excess contributions will go on your 2025 tax return.
"That paragraph only addresses a contribution returned before the due date of the tax return, "
What? It specifically says you can have it returned up to 6 months after the due date, if you already timely filed.
We are talking here about distributions made in March of 2025, before the due date of the 2024 tax return, so invoking section 301.9100-2 need not be done. That paragraph only would apply if the tax return was filed by April 15 and the return of contribution was made later.
Okay so just to be sure I understand, invoking section 301.9100-2 would only be done if someone removed 2024 excess contributions after April 15th and before October 15th?
Sorry to be so needy. This is quite a complex puzzle. Again grateful for your input!
Correct. In this case the distribution was made before the 6-month extension period, not during the 6-month extension period.
See section 301.9100-2(b): https://www.law.cornell.edu/cfr/text/26/301.9100-2
"We are talking here about distributions made in March of 2025, before the due date of the 2024 tax return, "
doing so voids the penalty on an excess 2024 contribution and make the allocable earned income taxable instead.
Thanks for that link.
I'm a bit puzzled by Part (e) Example 2.
It seems to imply that if you filed your return before April 15th, then the date you filed is considered to be the "due date."
What's your take on this?
March 16, 1998 in that example was the due date for a corporation using a calendar tax year to file its 1997 tax return.
Yes, your individual 2024 the tax return is considered to have been filed on April 15, 2025 if you filed before that date. That's why the automatic extension under section 301.9100-2 takes you to October 15, 2025 to make a statutory election. In your case, you already made the statutory election and obtained the return of contribution in March of 2025, so no 6-month extension is needed to obtain the distribution, no need for section 301.9100-2.