Over-contribution to Roth IRA in 2021 and Filing a 5329

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Lana2016
Posts: 31
Joined: Mon May 09, 2016 11:20 pm

Over-contribution to Roth IRA in 2021 and Filing a 5329

Post by Lana2016 »

Hi,
I realized (a bit late) that I made an excess contribution of $1450 to my Roth IRA in 2021.
I called Vanguard. They said to remove the excess, amend my 2021 taxes with Form 5329 to pay the 6% penalty.
For 2023, I will receive form 1099R to show that the excess has been removed. That is what they said.

I withdrew the excess $1450 earlier today.
I asked if I have to withdraw the earnings, and the representative said they do not calculate it. He only asked me to remove the excess amount.

I did not contribute at all in 2022, zero. Not yet.

Since I owe 6% penalty ($87) each year that excess money remains in ira, I downloaded two copies of Form 5329, for 2021 and 2022.
At this point I am trying to figure out what exactly I am supposed to do next. I guess, my next steps are:

On the f 5329 for 2021 :
line 22 (prior year excess contributions): 0
line 23 (excess contributions for for 2021): 1450
line 24 (total):1450
line 25 (additional tax 6%): 87

On the f 5329 for 2022 :
line 22 (prior year excess contributions): 1450
line 23 (excess contributions for for 2022): 0
line 24 (total):1450
line 25 (additional tax 6%): 87

Amend my 2021 taxes with 5329 for 2021.
Include 2022 form 5329 with my taxes for 2022.

Am I missing anything? What else has to be done?
Suggestions are greatly appreciated. Thanks!
Macaroni2314
Posts: 270
Joined: Fri Mar 31, 2023 5:31 am

Re: Over-contribution to Roth IRA in 2021 and Filing a 5329

Post by Macaroni2314 »

Lana2016 wrote: Mon Mar 13, 2023 8:43 pm Hi,
I realized (a bit late) that I made an excess contribution of $1450 to my Roth IRA in 2021.
I called Vanguard. They said to remove the excess, amend my 2021 taxes with Form 5329 to pay the 6% penalty.
For 2023, I will receive form 1099R to show that the excess has been removed. That is what they said.

I withdrew the excess $1450 earlier today.
I asked if I have to withdraw the earnings, and the representative said they do not calculate it. He only asked me to remove the excess amount.

I did not contribute at all in 2022, zero. Not yet.

Since I owe 6% penalty ($87) each year that excess money remains in ira, I downloaded two copies of Form 5329, for 2021 and 2022.
At this point I am trying to figure out what exactly I am supposed to do next. I guess, my next steps are:

On the f 5329 for 2021 :
line 22 (prior year excess contributions): 0
line 23 (excess contributions for for 2021): 1450
line 24 (total):1450
line 25 (additional tax 6%): 87

On the f 5329 for 2022 :
line 22 (prior year excess contributions): 1450
line 23 (excess contributions for for 2022): 0
line 24 (total):1450
line 25 (additional tax 6%): 87

Amend my 2021 taxes with 5329 for 2021.
Include 2022 form 5329 with my taxes for 2022.

Am I missing anything? What else has to be done?
Suggestions are greatly appreciated. Thanks!
Hi Lana,

What did you end up doing if you don't mind me asking? My friend is in the exact same situation. I had to refer him to a CPA, but based on what I've been reading on the Internet, the CPA seems to be giving inaccurate information.

So I was wondering if you followed this through to the end and got some closure on the situation.

Thanks!
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