Excess TIRA Contribution in 2001
If a client finds that he was ineligible to make a 2001 TIRA contribution, what is the proper steps for correction given he is beyond the usual 3-year look back period for filing 1040x?
Do these steps fulfill the requirements? Filing a set of standalone 5329s for 2001-2007 with 6% penalty payment, distributing the excess as part of his 2008 gross income and filing an additional 5329 in 2008 showing the excess correction. I expect an IRS billing for interest on the penalities and the excess.
mrp
Permalink Submitted by Al Fry on Tue, 2008-07-15 23:17
Did he not have any income in 2001?
Permalink Submitted by Michael Petersen on Wed, 2008-07-16 14:41
The client’s AGI exceeded $52K and he mistakenly made a deductible contribution to his IRA. After learning of the the Roth, in subsequent years he contributed to a Roth. My concern is how to make the correction without being able to file an amended return.
Permalink Submitted by Alan Spross on Wed, 2008-07-16 19:53
He was eligible to contribute in 2001, but his modified AGI may have been too high to deduct the contribution. Since he took the deduction and the tax year is now closed, he is home free and should do nothing. It is also possible that he was not a retirement plan participant in that year and was fully eligible for the deduction.
This was not an excess contribution, but possibly just an error in taking the deduction. He no longer has any exposure as a result of that error, if in fact it was an error.