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Old 10-08-2016, 06:15 PM
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IRA excess accumulation in 2014

In 2014 the distribution from my IRA was less than the RMD due to a problem with the IRA administrator which created an excess contribution. On my 2014 return I filed form 5329 with the explanation that I would withdraw excess accumulation in 2015 the and zero penalty.

For 2015 I had the IRA administrator do both a 2015 normal distribution and the 2014 excess contribution - distribution . Unfortunately this was done after 10/15/15 and the 1099-R shows only one total normal distribution which is the sum of 2015 normal distribution and the 2014 excess contribution ( excess accumulation ).

I am not sure how to proceed with the filing from here. How do I enter 2014 and 2015 distribution info for each year so the IRS knows the 2014 excess contribution has been distributed and the excess contribution corrected. Is there any excise tax 2015 form 5329?



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Old 10-08-2016, 10:45 PM
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In 2014 the distribution from my IRA was less than the RMD due to a problem with the IRA administrator which created an excess contribution. On my 2014 return I filed form 5329 with the explanation that I would withdraw excess accumulation in 2015 the and zero penalty.========>> good; No matter what the reason, contributing beyond the IRS limit could trigger a tax penalty if you don't take steps to handle the excess;I mean If you contribute more than is allowed to your IRA and fail to remove the correct amount when correcting the excess, the IRS could determine that the correction did not occur and assessing penalties. The IRS allows a grace period during which you can remove excess IRA contributions without penalty. The deadline is the due date for filing your tax return, including extensions. If you realize you added too much money after you file your return, you can still avoid the 6% penalty by removing the extra money and filing an amended return by your filing deadline, including extensions by oct 15 2015.



For 2015 I had the IRA administrator do both a 2015 normal distribution and the 2014 excess contribution - distribution . Unfortunately this was done after 10/15/15 and the 1099-R shows only one total normal distribution which is the sum of 2015 normal distribution and the 2014 excess contribution ( excess accumulation ). ======> since your total IRA contributions are greater than the allowed amount for the year of 2014 in your situation, and UNLESS you have withdrawn the excess contributions, you must complete Form 5329 to calculate a 6% penalty tax on the excess contribution. This penalty tax will continue to be assessed every year on ALL excess contributions (those from prior year along with any in the current year) until you withdraw the excess contributions.So you can avoid this tax by withdrawing any excess amount before the DUE date. Aslongas you do not withdraw the excess amount by the DUE date, you will pay the penalty again in the following year.
Note that each year you must enter on Line 9 of Form 5329 the amount of excess Traditional IRA contributions from Line 16 of the prior year's Form 5329.

I am not sure how to proceed with the filing from here. How do I enter 2014 and 2015 distribution info for each year so the IRS knows the 2014 excess contribution has been distributed and the excess contribution corrected. Is there any excise tax 2015 form 5329?=======>> as said previously, each year you must enter on Line 9 of Form 5329 the amount of excess Traditional IRA contributions from Line 16 of the prior year's Form 5329.

to treat withdrawn contributions, No deduction was allowed for the excess contributionon 2014 return and You withdraw the interest or other income earned on the excess contribution. You can take into account any loss on the contribution while it was in the IRA when calculating the amount that must be withdrawn. You need to contact the admin for professional help



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