5329

Submitted by Kiki Sakaguchi on Tue, 2018-12-18 20:13

1. I made 1k excess to traditional IRA in 2005. The amount was absorbed in 2006. I filed 5329 with 2005 and 2006 returns at the time, but just discovered there was an error on 2006 form. My accountant didn’t list any number at line 10 on 2006 form, therefore the line 13 was 0 and line 14 & 16 still listed 1k. I paid $60 tax for 2006 again. (The line 10 needed to be 4k and 1k excess from 2005 would’ve absorbed. It shouldn’t have had excess.) He never prepared 5329 for me thereafter.
Do I have to amend 5329 for 2006 to show the 2005 excess was carried over and no excise tax for 2006 and thereafter?

2. I also made $500 excess contribution to Roth IRA in 2015. Just realized now and I’m filing 5329 for 2015 and 2016. The amount has been carried over to 2016 so I mailing them with excise tax payment for 2015. Can I mail them now and use1040’s “ENCLOSING A PAYMENT” address?



Submitted by Alan - IRA critic on Tue, 2018-12-18 20:41

  1. The 2006 5329 was incorrect, but the statute of limitations has now expired on that form so it cannot be amended. Unfortuneately, that leaves a 1000 excess contribution carried into 2007. You may want to check into 2007 or 2008 to see if you can absorb the 1000 in those years, because technically there is no SOL on excess contributions when a 5329 is not filed. 
  2. Yes, you can mail them now, but use the current 1040 address. What about the excess carried into 2017 or did 2016 absorb it?

Submitted by Kiki Sakaguchi on Tue, 2018-12-18 20:57

1. I will file 2007 5329. Yes, it will absorb the 1000 and excess will be 0 for the year. Do they charge any fee for filing this form late?  2. Yes, 2016 absorb the 500, so 2015 with fee, 2016 with no fee.3. Can I mail 2007, 2015 and 2016 or should I mail 2007 separately? Since I have 2015 payment, I willl use 1040’s “enclosing the payment” address.

Submitted by Kiki Sakaguchi on Tue, 2018-12-18 21:29

1. 2007 5329 for traditional IRA. I have contributed 500 to Roth the year, but 1k can still absorb.Do I fill line 9 -1000 and line 10 –  I don’t have traditional IRA contribution the year, but 500 to Roth. Do I list 4k or 3500 here?

Submitted by David Mertz on Tue, 2018-12-18 21:45

I don’t see why the 2006 Form 5329 cannot be amended to show $1,000 on line 9, $4,000 on lines 10 and 13 and zeros on lines 14, 16 and 17.  With no new contribution made for 2006 (and being eligible for at least a $1,000 contribution in 2006), the original lack of an entry on line 10 is clearly erroneous.  You won’t be able to get the $60 back since the deadline for obtaining a refund was long ago, but that doesn’t mean to me that the erroneous form cannot be amended to eliminate the excess.  You would also want to file 2006 Form 8606 to claim the $1,000 as a nondeductible contribution since you can’t get back any refund that a deduction for the contribution would provide.

Submitted by Kiki Sakaguchi on Wed, 2018-12-19 14:15

According to Alan, it seems like I can’t amend 2006 form. I would like to confirm about line 10 on 5329. Since I contributed 500 to Roth in 2007, line 10 for traditional will be 3500?

Submitted by David Mertz on Wed, 2018-12-19 15:47

  • I’m skeptical of Alan’s position on that.  The three-year statute of limitations is for claiming a refund.  I don’t see that there is a deadline for correcting the erroneous 2006 Form 5329 absent any expectation of receiving a refund of the $60 penalty.
  • It’s a moot point, though.  Filing a 2007 Form 5329 to apply the excess as a 2007 contribution accomplishes the same thing since you can’t get back the $60 penalty payment for 2006 anyway.  In the case of filing a 2007 Form 5329 to apply the excess, I would also file a 2007 Form 8606 to claim it as a nondeductible contribution except if subsequent to 2007 but prior to 2018 you made any nondeductible traditional IRA contributions or made any distributions from a traditional IRA.
  • Yes, if you made a regular contribution of $500 in 2007, line 10 of the 2007 Form 5329 would be $3,500.

Submitted by Kiki Sakaguchi on Wed, 2018-12-19 21:27

  • Thank you for the info, DMx.  I think I may file 2007 5329 just in case. Should I file 2007 T-IRA, 2014 and 2015 Roth IRA’s 5329 all together or 2007 separately?
  • Now another question after reviwing my return for 05 and 06. 5k Traditional IRA was contributed in Feb 06.   Custordian applied this contribution to 05 tax year. My accountant included 4k deduction in 05 and 1k deduction in 06 returns. I’m not sure if I was qualified for 1k deduction in 2006 from this contribution.

Submitted by William Tuttle on Wed, 2018-12-19 21:51

  • The SOL starts with the filing of the 5329. There is no SOL if you never file a 5329 for that year. If you file an incorrect 5329, the SOL clock starts
  • “I’m skeptical of Alan’s position on that.  The three-year statute of limitations is for claiming a refund.  I don’t see that there is a deadline for correcting the erroneous 2006 Form 5329 absent any expectation of receiving a refund of the $60 penalty.”

Submitted by David Mertz on Wed, 2018-12-19 23:13

  • With the $1,000 treated as a continuing excess contribution on the 2006 Form 5329, the $1,000 should not have been reported as a deductible IRA contribution on the 2006 tax return, but there is nothing the IRS can do about that now.  With it reported as deductible on the 2006 tax return it would be inconsistent to treat it as a nondeductible contribution on a 2007 Form 8606 as I suggested as a possibility, so ignore that suggestion.
  • I can see where amending the 2006 Form 5329 would constitute filing claim for refund (despite the fact that no refund would be expected), so filing the amendment would be prohibited under section 6511(a) which sets the three-year deadline for filing a claim for refund.

Submitted by Kiki Sakaguchi on Thu, 2018-12-20 08:46

Thank you for all your help! 

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