Roth IRA overcontribution in 2019 and the need to file 2019 tax amendment

Forum|Forum|5 years ago
February 10, 2021
1 reply
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My wife and I each contributed to Roth IRA to the maximum ($6,000) for 2019. We did not manually enter the Roth IRA contributions into Turbotax, and therefore were not aware of the overcontribution of $240. I doublechecked the IRA worksheet for 2019 and it is empty. The "retirement plans and social security" section from my Turbotax 2019 is blank with no number in it.

It seems to me that there are 2 issues that need to be fixed a) we forgot to enter the 2019 Roth IRA contribution to Turbotax for tax return for 2019; b) there was excess contribution of $240 dollars for both my wife and myself for 2019 Roth IRA contribution. We are below 50 years old and the limit for 2019 is $6,000 for each of us.

Would you please let me know:
1. Do we still need to file amendment for 2019 tax return to report the 2018 contribution to Roth IRA, since our Roth IRA custodian has already communicated with IRS about our 2019 Roth IRA contribution?

2. I am inclined to contact our Roth IRA custodian (Vanguard) to withdraw the amount over-contributed with earning since the over-contribution happened for 2019 and I have already maxed out Roth IRA contribution for 2020. I am assuming complicated paperwork would be required to carry the over-contributed amount to 2021, and it could be hard to figure it out by ourselves. Do you see any problem with the plan?

3. Once all issues are resolved, is there a way for me to confirm that I did not mess up? It would give us a peace of mind if IRS can confirm that my over-contribution issue is resolved.

Thank you very much.

D

DanaB27

1) Yes, you will have to amend your 2019 tax return if you had an excess contribution in 2019 and did not withdraw the excess contribution plus earnings by the due date of the 2019 tax return. Excess contributions are taxed at 6% per year for each year the excess amounts remain in the IRA. Please see How do I amend a 2019 return in TurboTax?

2) Yes, you can withdraw the excess contribution and earnings to avoid the any future penalties on the excess contribution.

3)You will get a 1099-R for the withdrawal of the excess contribution and earnings that will be sent to the IRS as well and will confirm that you withdrew the excess contribution.

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A

Anonymous

Shall I use Turbotax 2020 or Turbotax 2019 to file the amendment for the 2019 tax return? I have both but which can best help me deal with the excess contribution to Roth IRA for tax year 2019?

Thank you