SEP – Correct on return/deposited too much
I think this is an easy fix. I filed my 2014 tax return for SEP contribution of $21,432
. I miscalculated prior to filing and sent in $21,636.
So tax return is correct. Can’t I just have trustee characterize the $204 overage to 2015 SEP contribution? Seems pretty straightforward… maybe too simplistic?
Permalink Submitted by Maggie Benton on Sun, 2015-04-12 21:16
Am I right ? Wrong?
Permalink Submitted by Alan - IRA critic on Mon, 2015-04-13 02:38
You can carry over the excess contribution, but you must file Form 5330 and pay the 10% excise ($20). You would deduct the 21,432 for 2014 and could then reduce your 2015 contribution by 204 and deduct the total for 2015. That may be more simple that requesting a return of the 204 excess along with the earnings and paying taxes and penalty on the earnings in 2015. Your choice. You can do the carryover without involving the SEP custodian, but would have to amend your 2014 return to include the 5330 and the excise tax. But I think you actually made the excess contribution in 2015, so if you opt to remove it with earnings, the earnings would be taxable in 2015 and you would not have to amend your 2014 return.
Permalink Submitted by David Mertz on Thu, 2015-04-16 15:24
My SEP-IRA custodian (for my contributions based on being self-employed) records the year *in* which a contribution is made, not the year *for* which a contribution is made. Form 5498 also only shows the amount of SEP-IRA contributions made *in* the year, not *for* the year. If the SEP-IRA contribution was made in 2015 before the due date of the 2014 tax return, isn’t the year for which the contribution was made determined by which year (2014 or 2015) the employer (or self-employed) reports it on their tax return?
Permalink Submitted by Jose Morales on Thu, 2015-04-16 15:49
Yes, that is correct. The 5498 will not show for which tax year the contribution was made, only the calendar year in which it was made.