topic Re: Excess SEP contribution in Get your taxes done using TurboTax

Excess SEP contribution

pziggy — Wed, 19 May 2021 19:13:16 GMT

I have an excess SEP contribution in 2020, but do not wish to withdraw the excess. I will only deduct the maximum allowed on my taxes, which is less than the excess.

I have read in other forums that if I leave the excess in, I will be subject to a penalty and must reduce the maximum contribution for 2021 by the 2020 excess amount.

Is this correct? If so, what would be the penalty?

Re: Excess SEP contribution

Mike9241 — Wed, 19 May 2021 19:35:58 GMT

6% of the excess.

Re: Excess SEP contribution

pziggy — Wed, 19 May 2021 21:49:29 GMT

Thank you.

IRS confirmed that is the correct penalty. They also advised I fill out form 5329 to account for the overcontribution and penalty.

However, Turbo Tax does not automatically introduce this form and when I introduce the form manually it is very cumbersome to input information. It does not allow me to input the required information.

Any advise?