rbynaker
Level 14
12-16-2019
12:37 PM
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Keep in mind these snowball until they are withdrawn. So if excess Roth contributions per year are:
2016: $6,500
2017: $6,500
2018: $6,500
2019: $7,000
Then you have a 5329 for 2016 showing $6,500 excess contributions subject to the 6% penalty.
Another 5329 for 2017 showing $13,000 excess contributions ($6,500 current year + $6,500 carryover) subject to 6%.
And a 5329 for 2018 showing $19,500 excess contributions @ 6%.
The custodians have some complex formula to calculate and allocate earnings but I would give them the excess amount from each year and let them calculate and distribute the excess contributions and earnings. This will flow through the 8606 and 5329 for 2019, only the earnings will be taxable on the 8606 and the distribution will clear out the excess contribution carrying over on the 5329.
Rick
2016: $6,500
2017: $6,500
2018: $6,500
2019: $7,000
Then you have a 5329 for 2016 showing $6,500 excess contributions subject to the 6% penalty.
Another 5329 for 2017 showing $13,000 excess contributions ($6,500 current year + $6,500 carryover) subject to 6%.
And a 5329 for 2018 showing $19,500 excess contributions @ 6%.
The custodians have some complex formula to calculate and allocate earnings but I would give them the excess amount from each year and let them calculate and distribute the excess contributions and earnings. This will flow through the 8606 and 5329 for 2019, only the earnings will be taxable on the 8606 and the distribution will clear out the excess contribution carrying over on the 5329.
Rick