interest and penalty on excess Roth IRA contributions calculation

Submitted by J S on Tue, 2022-08-30 00:58

I sent off my form 5329 and the appropriate 6% tax on my excess roth ira for multiple years, and i am awaiting interest and penalty from the IRS. Can someone tell me if interest and penalty will be assessed as failure to file tax return? I did file for those years but was unaware of my excess until recently. Trying to prepare . I read somewhere that it will be “failure to file” since the 5329 is a stand alone form.
Thank you



Submitted by Alan - IRA critic on Tue, 2022-08-30 03:42

 There appears to be little consistency with respect to charging late interest on the late excise taxes. Not hearing much about a failure to file penalty in addition, so I think that penalty is rarely levied. And that was before today’s huge IRS backlog and having to hire and train new agents. Therefore, in an individual case it is not possible to know whether you will ever hear from the IRS or how long it may take to process the 5329 forms. 

Submitted by William Tuttle on Tue, 2022-08-30 03:47

  • Just clarifying. Did you send a separate Form 5329 for each year there was an excess contribution balance?
  • I am acquainted with several Form 5329 filings for excess IRA contributions. I am not aware of a single case of a failure to file penalty being assessed.
  • Also, it is hit or miss whether the IRS will assess an interest penalty. 

Submitted by J S on Tue, 2022-08-30 13:37

Yes, I filed 7 separate Form 5329 s for every year i had an excess. The total excess was about $14,000.  I also included separeate checks with the 5329s for  the 6% tax. The 5329s were all received by the IRS and the checks were all cashed in Feb 2022. They said they will contact me they needed anything else or if i owed money for interest or penalty.  I received a letter a week ago saying they need another 60 days to process my paperwork. 

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