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Level 1

What I should do for the new excess ROTH IRA contribution in 2017 which I just discovered by amending 2017 tax return after receiving 2018 1099-R?

I made $2250 excess ROTH IRA contribution in 2017 and withdrew the excess contribution and earnings, $158 early April, before the due day. In Feb. 2019, I got the 1099-R. Since the earnings are taxable in 2017, I'm amending my 2017 tax return for this taxable income. Unfortunately, there is a new excess in 2017 due to the income change. I was wondering if I have to pay 6% penalty for the new excess which I just discovered for 2017.  Do I have to pay 6% penalty for the new access for 2018? If yes, what I should do in TT when I file my 2018 tax return. Thanks!

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Level 20

What I should do for the new excess ROTH IRA contribution in 2017 which I just discovered by amending 2017 tax return after receiving 2018 1099-R?

This is a common problem with individuals in the phase-out range.  Yes, your amendment must include the penalty on the new excess, calculated on 2017 Form 5329.

You'll owe this same penalty again with your 2018 tax return unless you are able to apply this new excess as a part of your Roth IRA contribution for 2018, reported on 2018 Form 5329.  Whatever of this excess has been carried into 2019 will ether have to be applied as part of your 2019 Roth IRA contribution or you'll need to obtain a regular distribution (not a return of contribution before the due date of your 2017 tax return) to resolve the excess for 2019 and avoid another excess contribution penalty for 2019.

If you've already started your 2018 tax return by transferring in your original 2017 tax file, you'll need to tell 2018 TurboTax that you have an excess Roth IRA contribution carried in from 2017 (the amount of the new excess).

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Highlighted
Level 20

What I should do for the new excess ROTH IRA contribution in 2017 which I just discovered by amending 2017 tax return after receiving 2018 1099-R?

This is a common problem with individuals in the phase-out range.  Yes, your amendment must include the penalty on the new excess, calculated on 2017 Form 5329.

You'll owe this same penalty again with your 2018 tax return unless you are able to apply this new excess as a part of your Roth IRA contribution for 2018, reported on 2018 Form 5329.  Whatever of this excess has been carried into 2019 will ether have to be applied as part of your 2019 Roth IRA contribution or you'll need to obtain a regular distribution (not a return of contribution before the due date of your 2017 tax return) to resolve the excess for 2019 and avoid another excess contribution penalty for 2019.

If you've already started your 2018 tax return by transferring in your original 2017 tax file, you'll need to tell 2018 TurboTax that you have an excess Roth IRA contribution carried in from 2017 (the amount of the new excess).

View solution in original post