Solved: IRA/401K Mixup
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gr4dezer0
New Member

IRA/401K Mixup

I accidentally entered my 401k contributions as ROTH IRA contributions, which of course set me over the contribution limit for IRAs.  So now I owe a tax on it.

It says I need to remove the overage.  But since I didn't ACTUALLY contribute that much, do I really need to do anything?  I'm fine paying the tax on the "overage" as it's not really that much, and it would be a headache to amend, I just don't want anything to come back to bite me in the butt next year.

 

Should I do anything?

1 Best answer

Accepted Solutions
DanaB27
Employee Tax Expert

IRA/401K Mixup

No, you do not need to withdraw the excess since you didn't make actual contributions to a Roth.

 

But you should remove the contribution from your return since excess contributions are taxed at 6% per year for each year the excess amounts remain in the IRA. 

 

 

If you have already filed your return then you will need to see if your return gets accepted or rejected. Please be aware that the IRS currently won't start processing returns until February 12, 2021.

 

  • If your return will be rejected by the IRS, then all you have to do is make the changes on your return and refile.
  • If your return will be accepted by the IRS, then you have to file an amended return (1040X) to make changes. But you might want to wait until your refund or payment is processed. Please be aware that you can e-file your 2020 amended federal tax return, but most states require amendments to be printed and filed by mail.

 

 Please see FAQ How to amend a tax return for instructions.

 

 

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1 Reply
DanaB27
Employee Tax Expert

IRA/401K Mixup

No, you do not need to withdraw the excess since you didn't make actual contributions to a Roth.

 

But you should remove the contribution from your return since excess contributions are taxed at 6% per year for each year the excess amounts remain in the IRA. 

 

 

If you have already filed your return then you will need to see if your return gets accepted or rejected. Please be aware that the IRS currently won't start processing returns until February 12, 2021.

 

  • If your return will be rejected by the IRS, then all you have to do is make the changes on your return and refile.
  • If your return will be accepted by the IRS, then you have to file an amended return (1040X) to make changes. But you might want to wait until your refund or payment is processed. Please be aware that you can e-file your 2020 amended federal tax return, but most states require amendments to be printed and filed by mail.

 

 Please see FAQ How to amend a tax return for instructions.

 

 

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

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