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Can I avoid amending my 2016 return next year (due to an excess SEP-IRA contribution) by withdrawing the excess contributions & earning before filing my 2016 taxes? How?

Forum|Forum|7 years ago
June 5, 2019
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I made an excess contribution in 2016 to my SEP IRA.
I received a Form 5498 reflecting that amount.
I withdrew the excess contribution and excess earnings in Feb 2017.
I am under age 59.5 and I am not disabled.
I have not yet filed my 2016 taxes.
I want to file my taxes in such a way to avoid having to amend my return next year.

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Best answer by DavidD66

If you withdrew the excess contribution, plus any income associated with the excess before you file your taxes, it's as if you never made the contribution. You will not have to file an Amended return. The Form 5498 is an informational form, but you do not use it to file. The IRA custodian will report the withdrawal on the 5498 that will be filed later this year.

D

DavidD66Answer

If you withdrew the excess contribution, plus any income associated with the excess before you file your taxes, it's as if you never made the contribution. You will not have to file an Amended return. The Form 5498 is an informational form, but you do not use it to file. The IRA custodian will report the withdrawal on the 5498 that will be filed later this year.

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Employee

Not quite. Any earnings on excess must be reported as ordinary income in 2016. If you don't , you'll end up having to amend later when you get the 1099-R from the custodian showing taxable earnings.
If your money was sitting and earned nothing, then there is nothing to report.
Put the excess earnings on Line 15B.