- Mark as New
- Bookmark
- Subscribe
- Permalink
- Report Inappropriate Content
Client made an excess SEP contribution for 2018. He is self employed. Can he withdraw the excess amount without tax or penalty consequences?
Best Answer Click here
- Mark as New
- Bookmark
- Subscribe
- Permalink
- Report Inappropriate Content
It was supposed to be withdrawn by the due date of the tax return to avoid penalties.
Was any of it paid in 2019? If yes, the "excess" could be designated as a payment for his 2019 SEP contribution.
The more I know the more I don’t know.
- Mark as New
- Bookmark
- Subscribe
- Permalink
- Report Inappropriate Content
He paid it in monthly during 2018, not waiting to calculate it when doing the return.
- Mark as New
- Bookmark
- Subscribe
- Permalink
- Report Inappropriate Content
he did the same thing in 2019 and obviously didn't do taxes yet. Take it out as a 2019 excess contribution and avoid penalty?
- Mark as New
- Bookmark
- Subscribe
- Permalink
- Report Inappropriate Content
The 2018 excess contributions need to be removed immediately, and they are subject to the penalty.
The 2019 excess contributions are not subject to penalty IF removed right now, before 4/15/20.
If any of the 2019 contributions were actually FOR 2018 (such as the Jan one for examply..) you might be able to manipulate one month's contribution into *not* being in excess. Would be a bit of work, for likely not much gain, depending on the amounts.
- Mark as New
- Bookmark
- Subscribe
- Permalink
- Report Inappropriate Content
It sounds like Form 5329 needs to be filed for 2018. https://www.irs.gov/forms-pubs/about-form-5329
Answers are easy. Questions are hard!
