Can the 6% Excess IRA contribution penalty be abated
Is it possible to request penalty abatement for the 6% excess IRA contribution penalty? Do you attach an explanation to the form 5329 for prior years? Do you have to pay the penalty first?
Any advice is greatly appreciated.
Lisa
Permalink Submitted by Alan - IRA critic on Mon, 2014-11-03 23:37
There is no abatement procedure for excess contribution excise taxes, and there is also no statute of limitations. The 5329 includes some automatic corrective measures such as applying excess contributions to later years for which a contribution was possible but not done. And distributions are also applied against the excess amount. But once the actual penalty is determined, there is no way to request abatement of it. The IRS might also bill late interest on prior year 6% excise taxes that are paid in later years. In other words, this is not like missing an RMD and requesting the 50% penalty waiver.