Excess SEP contribution

Forum|Forum|5 years ago
May 19, 2021
1 reply
7 views

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?

Mike9241

Level 15

6% of the excess.

Mike9241

pziggyAuthor

Level 2

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?