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Author: pretender76TX Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121482  
Subject: Re: Reporting earnings on excess Roth contributi Date: 3/26/2014 4:30 PM
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>>> For group 1 you cannot avoid the 6% penalty. However, the penalty is charged on only the contribution. Complete Form 5329, Part IV, for each year. One per year, and get the right years' forms. These you can file alone, one per year. The penalty on each is $300.

Form 5329 Part IV (2011) -- to be filed in 2014 to amend 2011 return
------------------------
Line 18: 0 (no excess contribution in 2010)
Line 19: N/A
Line 20: N/A
Line 21: N/A
Line 22: N/A
Line 23: 5,000 (excess for 2011)
Line 24: 5,000 (total excess)
Line 25: 300 (tax owed)

Form 5329 Part IV (2012) -- to be filed next in 2014 to amend 2012 return
------------------------
Line 18: 5,000 (excess contribution in 2011)
Line 19: 0
Line 20: 0 (no distributions)
Line 21: 0
Line 22: 5,000 (excess for prior years)
Line 23: 5,000 (excess for 2012)
Line 24: 10,000 (total excess)
Line 25: 600 (tax owed)

The excess contribution for 2011 gets counted toward the total excess. As far as I can tell, this will continue happening for future years until a distribution is made to withdraw the excess contribution.

From your earlier responses I believe you disagree with this conclusion. Could you please explain how you see Line 24 going down unless the distribution is made.


Thanks again for clarifying things,

boris
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