Roth Contribution
I have a client who put too much in her ROTH this year, contributions are limited due to income. In 2015 she could have maxed it out, but she didn’t. I thought an easy fix would be for her to ask her custodian to simply categorize the deposits that were made in Jan- April 2016 as 2015 contributions. Her custodian said they can’t do that. Seems to me that she doesn’t really need them to do it, but could make record in her notes. Can you offer any advice on this?
Permalink Submitted by Alan - IRA critic on Mon, 2016-10-24 16:22
The custodian might have re assigned the contributions prior to 4/18 since that was the deadline for timely 2015 contributions. The custodian in May had to report all 2015 contributions to the IRS and client on Form 5498. Therefore, client will have to withdraw (or recharacterize 2016 excess Roth contributions to TIRA) the excess amount to avoid the 6% excise tax. If there are earnings on the excess withdrawal, the earnings are taxable for 2016.