Client made a 6K contribution to his traditional ira in 2019 and 6K to his Roth IRA in 2020. HIs high joint income disallows 100% of the contribution for each year.

[dnplans]

The client has not withdrawn his excess contributions. Should I amend 2019 - add excess IRA contribution to 5329? Should I report excess Roth contribution on 2020? or report both in 2020 since excess amounts not withdrawn?

[George4Tacks]

2019 and 2020 should contain the IRS 5329.

The excess should be withdrawn as quickly as possible, so that the 5329 is no required on the 2021 return.

[rbynaker · Accepted solution]

The 2019 IRA contribution would probably not be excess (unless there's no earned income), it would simply be non-deductible.  I've reported these alone on Form 8606 and that the TP sign & mail it in by itself.  Technically the IRS can assess a late penalty (I think it's $50) but I've never seen it actually happen.

The 2020 Roth IRA contribution can be corrected by 5/17/21 and you just pretend it never happened.

[dnplans]

Thank you so much!  Genius response.  I was overthinking. Debra