Excess Contribution to Roth IRA
My wife and I mistakenly contributed to a Roth IRA in December 2021. I just realized that I could not do that as my income is too high. How do I correct the problem and is there a way to avoid the 6% penalty? Does the Secure Act impact the 6% penalty?
Permalink Submitted by Alan - IRA critic on Tue, 2023-04-04 19:12
The Secure Act does not affect the 6% excise tax, which is owed for 2021 with a 2021 5329 for each of you. The excess amount from 2021 carries over to the 2022 5329, and the instructions for the 2022 5329 will determine if you can “absorb” the 2021 excess or not. If not and you did not take a distribution in 2022, then you will owe the excise tax again for 2022 on the 2021 uncorrected excess. What is your IRA contribution situation for 2022 and does your 2022 income permit this contribution?