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