Dear Alan et al,

I have a client younger than 59 1/2 who made a $410 excess contribution to her Roth IRA for the 2018 tax year. She did not recharacterize this excess contribution by October 15th. I’ve read the Dec 2019 newsletter and talked with the custodian’s tax reporting department. I understand that the options are:

#1. Remove the $410. The custodian will put Code ‘J’ in Box 7 of the 1099R that she will receive for the 2019 tax year. The client’s CPA will file Form 5329 and the client will pay the 6% excise tax ($24.60). The client’s CPA will file Form 8606 showing the withdrawal as a non-taxable return of contribution.

#2. Carry the $410 Roth IRA contribution forward for the 2019 tax year. The client’s CPA will file Form 5329 and Form 8606 as in option #1.

In either event, are Forms 5329 and 8606 filed on the 2019 tax return (the year that the withdrawal comes out)? I wanted to confirm that the 2018 return doesn’t need to be amended.

Thanks in advance,

Chris