Removal of an excess IRA contributon
If an individual is NOT on extension to file their tax returns for a given year, is there an automatic 6-month “grace period” that will allow the individual until October 15th to remove any excess IRA contributions?
Publication 590 seems to make it clear that there is no grace period by stating “in general, if the excess contributions for a year are not withdrawn by the date your return for the year is due (including extensions), you are subject to a 6% tax”.
This seems misleading though, because the instuctions for form 8606 under [i]Return of IRA Contributions [/i]states “If you timely filed your 2007 tax return without withdrawing a contribution that you made in 2007, you can still have the contribution returned to you within 6 months of the due date of your 2007 tax return, excluding extensions. If you do, file an amended return with ‘Filed pursuant to section 301.9100-2’ written at the top.”
Which is correct?
Permalink Submitted by Alan Spross on Wed, 2008-04-23 20:20
They are both correct, however Pub 590 does not make it real clear that filing a timely return is treated the same as filing for extension.
Therefore, the automatic extension is secured by either filing a return on time or filing an extension. The only way there is no extension is to let the due date pass without doing either.