How to enter my dependent's (my daughter) ROTH IRA information? (on 5329 form)

[kaitech3]

If the earning is not removed by April 15 (I can check the balance of the account), it is safer to extend my filing deadline from April to Oct ?  That leaves me more time to remove the earnings.

For the 2023 5329 form, 

5329 form for 2023.  I should enter both line 20, 21 and line 23 as $0 because there is no excess contribution for year 2023, is that right? 

   line 18:  3000   ( those are carryover from 2020, 2021, 2022)

   line 20:    0   ( we contribute $1000 for 2023, but removed it in April 2024. A little bit confuse. )

   line 21:    0  (add line 19 and line 20)

   line 22:   3000  ( line 18 minus line 21)

   line 23:    0  ( excess contribution for 2023)

   line 24:   3000   

   line 25:     180 ( 6% x 3000 penalty)

[fanfare]

 "We will pay 10% penalty no matter what (before or after April 15).  "

now you are adding yet another complication.

--

If there are no earnings , there is no 10% early withdrawal penalty.

If earnings are reported in tax year 2023 or later, there is no 10% early withdrawal penalty.

include those earnings on Form 5329 Line 2 (see instructions)

there is no early withdrawal for 2020-2022 because earnings stayed in the Roth IRA.

@kaitech3 

[kaitech3]

I guess I don't need to figure out what I need to pay for the penalty on the earnings.  It will show up on the 2024 1099-R form with some boxes are check ( I assume the earning will be removed in 2024). TurboTax will calculate the penalty, is that correct?

[kaitech3]

"there is no early withdrawal for 2020-2022 because earnings stayed in the Roth IRA." 

Can I leave the earning in the Roth IRA account?  Do I still pay for the panelty?

[kaitech3]

Sorry I read it wrong. Please ignore my previous reply.

Earning still need to be removed in 2024 with the excess contribution. 

[fanfare]

the only earnings to remove, if any, are those allocable to  $1,000 2023 contribution.

the custodian knows how to calculate it. She may have had a loss on that money.

@kaitech3 

[kaitech3]

Are you saying that she can keep the earning from 2020-2022 in the Roth account?

But she has to remove the earning for 2023, is that correct?

So the 10% penalty is for which year's earning?

[kaitech3]

I called the Schwab. It was told that they normally remove the earning with the excess contribution if I choose let Schwab calculate the earnings.  

[fanfare]

@kaitech3 

If you take out earnings on an excess reported previously on Form 5329, that is an early withdrawal and subject to penalty if your age is under 59 1/2 or you don't meet the 5-year holding requirement.

@dmertz 

Do you agree? (you don't have to wade through this entire thread, It's embarrassing)

[kaitech3]

Thanks for the help.