IRS penalty on excess Roth contributions

Submitted by Paula Calhoun on Sun, 2023-10-08 20:52

I posted earlier this year about making excess contributions to my Roth IRA from 2019-2022, and you were very helpful. I got all of it straightened out with my 2022 taxes by filing all the necessary forms, reporting the excess, and paying the penalty that accrued each year. I was hoping not to hear from the IRS about interest, but I received my first interest notice yesterday for 2020. It is only $29.80, but my husband got one too saying he also owes $29.80. I’m assuming they can charge him the same interest, since we file our 1040 jointly? I’m thankful the amounts are low, but it does seem kind of unfair to penalize him since the mistake was on my IRA, which was in my name only. Will we also get interest notices for 2019 and 2021? Not sure why we got 2020 before 2019.



Submitted by Alan - IRA critic on Sun, 2023-10-08 23:14

A late interest charge is often made for the delay in paying the excise tax, but the IRS has been inconsistent as shown by receiving the levy for only one year. Maybe you will receive interest for the other years soon. Since IRAs and the 5329 forms are individual, holding only one SSN, there should be no interest charge for husband if he did not make an excess contribution. Are you sure that none of the 5329 forms showed his SSN in error?  

Submitted by Paula Calhoun on Mon, 2023-10-09 10:10

I filed the 5329 in my name and SSN only, but I also filed 1040-X with both of our names and SSNs.  

Submitted by David Mertz on Mon, 2023-10-09 00:00

If you filed a joint tax return, interest on the late payment of the penalty would be a joint responsibility and it wouldn’t matter which of you paid it as long as it gets paid and credited appropriately.  What’s not clear is whether the $29.80 is the entire penalty and the second bill is a duplicate or if the $29.80 represents only half of the interest and the total amount that needs to be paid is $59.60.  I would obtain your tax account transcripts for the years in question to see what they say.

Submitted by Paula Calhoun on Mon, 2023-10-09 10:29

I found on a reputable tax sites that they send the notice to both spouses so that both are aware of the liability but that the amount is paid only once.

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