Overcontribution by Employer to Simple IRA

Self Employeed has their tax return on extension. The tax return is prepared and the Schedule C has a loss. During 2017 the taxpayer contributed $5000 to the Simple plan for himself.

How do you correct this? The custodian of the IRA says it’s too late to self correct and now have to correct using the Voluntary Correction Program. Is this the only way to fix it? The plan assets are so high that the IRS fee for VCP is $3000. over half the amount over contributed.

Is there any other way to fix this?

Oh, I also forgot to mention this person does have W2 wages. Is it possible to consider the contribution a traditional IRA contribution?



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