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MasterDexi
Returning Member

Withdrawal of Roth IRA excess contributions carried over from previous years

When filing my tax returns this year (for 2020), I noticed that my $6000 Roth IRA contribution for 2019 was in excess of what was allowed (and I submitted an amended 2019 tax return and paid the 6% penalty).

 

Now for 2020, I am wondering if I can withdraw this 2019 excess contribution as distributions before the 2020 tax filing deadline (i.e. 4/15/2021) to avoid the excess contribution penalty. I know that if the excess contribution was made in 2020, I can withdraw the excess + generated interest and avoid an excess contribution. But my specific question is if I can withdraw the 2019 excess contribution if the distribution is before the 2020 tax deadline. And if yes, is the procedure for reporting this withdrawal the same as for the 2020 excess (i.e. reporting it as a 1099R even if the 1099R is not received yet)?

 

Reading the tax forms it seems like that the answer might be no, the excess removal grace period (until the tax due date) is only for excess contributions of the tax year in question and not carryovers from previous years. Is this true?

 

Edit: I should add that my 2020 Roth IRA contribution limit is 0. So this means that I cannot use my 2020 contribution limit to account for the 2019 excess.

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1 Reply
ThomasM125
Expert Alumni

Withdrawal of Roth IRA excess contributions carried over from previous years

According to the treatment in TurboTax, you need to withdraw the excess by December 31. TurboTax will ask you what your excess contribution was from the previous year and what your IRA balance is at December 31. When you enter the same amount for both of those questions, you get the penalty.

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