Roth IRA Excess Contributions

[TP82]

I have a client that contributed to his Roth IRA for 12 years after he retired so he has excess contributions. He had no earned income during that time.  The investment company fixed 2025 and 2026 but what do I do to fix 2014-2024?

[Terry53029 · Accepted solution]

This is what google AI has to say

To fix the excess Roth IRA contributions from 2014–2024, your client must remove the excess contribution amounts (without earnings) as an ordinary distribution, amend past tax returns to pay a 6% excise tax per year, and submit IRS Form 5329 to formally report the corrections

[TP82]

Thank you!

[BobKamman]

What my AI Slop says is, "Because the statute of limitations for IRS tax audits is generally three years, fixing years 2014 through 2021 is often unnecessary unless you are contacted by the IRS."

I'm not sure I agree with @Terry53029 's AI Slop, "your client must remove the excess contribution amounts (without earnings)."  I think he has to remove the earnings also, and pay tax on them.  But then I don't know much about Roth IRA's, because they are a favorite tool of stupid people, and most of my clients are smart enough to avoid them.  Either that, or they're smart enough not to tell me if they have been getting away with funding them for years, even when not eligible. because there is no IRS enforcement to prevent it.