Question

Correct way to report excess of my Roth IRA on 2019 Federal Return

Forum|Forum|5 years ago
June 13, 2020
1 reply
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I thought I removed all the excess of the 2018 Roth IRA contribution before the filing deadline. While amending my 2018 return, I discovered that I did not completely remove all the excess but over contributed $60. I will be paying a 6% penalty for the excess for my amended 2018 return.

I have called my brokerage account to remove the remainder of my excess. For my 2019 return, do I need to still report that I have an overcontribution of $60 on my Roth IRA and pay a 6% penalty even though I will remove the excess before filing my 2019 tax return?

macuser_22

Employee

Yes you do. Since the 2018 excess was not removed before the due date of the *2018* tax return you owe the 6% 2018 penalty. The "by due date" only applies to the year that the contribution was *for*. Because the excess was also not removed before the end of the 2019 tax year (Dec 31, 2019), you also owe the 2019 6% penalty. The due date of the 2019 tax return is immaterial. If removed before Dec 31, 2020, you will not owe a 2020 penalty.

Since the 2018 penalty is being paid then you only need to remove the excess and not any earnings attributed to the excess - the 2018 penalty negates removing and taxing the earnings.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**