Excess Roth contributions for 2012-2014

Submitted by jim swinson on Wed, 2018-12-12 01:14

How does one handle excess Roth contributions for 2012-2016? I have read the other posts that discuss the requirement for filing a 5329 for each year with an excess contribution and attaching it to a 1040x. The last years (2015 and 2016) can be handled with an amended return but since amended returns are limited to the prior 3 years how are years 2012-214 reported. Does one simple start with 2015 and ignore 2012-2014?



Submitted by Alan - IRA critic on Wed, 2018-12-12 02:13

  • An amended return will not normally be requested by the IRS, since the excise taxes are reported on Form 5329, which is it’s own return. The rest of the return is not affected. But every once in awhile an examiner will ask for a 1040X even though no lines are changed on the 1040X.
  • Always start with the first excess year and work forward. If any Roth not corrective distributions were taken OR if there was Roth space to contribute that was unused, Form 5329 will credit the excess balance to date to that year, so it is possible that a Roth distribution may not even have to be distributed.
  • If no Roth unused Roth space or distributions have been taken, then a 5329 will have to be filed for each year through 2018. A 6% excise tax will be due for each year on a cumulative basis. The 2017 excise tax will be the same as for 2016 since no new excess was added in 2017. If the forms can be at least penciled out through 2017 and the total excess amount distributed before year end, the excise taxes will end in 2017. A 2018 5329 be filed to show the distribution and the elimination of the excess balance. Finally, a 2018 8606 must be filed to report the actual distribution for income tax purposes, but since the distributions are coming from the regular contribution balance there should be no income tax due for the distribution. The IRS may or may not bill late interest for the late payment of the excise taxes.

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