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(I just tried to post this, but I don't think it went through. Sorry if this is a repeat)

I'm new around here, so please let me know if this is not the place to post this. I posted on the taxes board yesterday, and was told this might be a better forum.

I contributed too much to my 1996 SARSEP. I was not notified by my employer until Dec 1997. Basically, I'm wondering what to do about it now. I've researched this issue a lot, and I'm very confused, but this is what I know now.

I recently read Form5305A-SEP, and it seems like I need to remove the excess contribution before April 15 of the year following the year I was notified (Apr 15, 1998). This would not be a problem, but I've heard that I also have to remove all income/earnings from the excess contribution. That could get tricky. Actions I would have to take: figure out how much that is, sell that much of my mutual funds (can I sell that many $ from one fund even though it went into several?), and report it as income for 1997 (or 1998?).

Other forms and publications seem to imply that the deadline is April 15 of the year following the contribution year (Apr 15, 1997), but I can't quote chapter and verse on that (I read Pub590, and probably got the impression from there, but I don't think it's clearly stated).

My understanding is that excess contributions that are not removed by the deadline are treated as regular IRA contributions. I did not contribute my max IRA contribution in 1996, so this seems like it may be the easiest way. Actions I would have to take: fill out 1996-8606 to report non-deductible IRA contribution, fill out 1996-1040X to report extra 1996 income, pay tax and interest (and penalties?).

Thanks for any help,
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