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From reading Pub 590 I understood that the excess contribution(s) along with earnings have to be removed from the Roth IRA in order to stop paying 6% excise tax each year it remains there. Please let me know what will happen if I leave it there.

We have to break your problem years into two groups.

Group 1: 2011-2012
Group 2: 2013-2014

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.

Group 2: We can now fix things without penalty.

1013: Complete Form 5329, Part IV, showing a zero contribution for 2013. The bottom line will be zero penalty, zero excess on hand.

If earnings for either year were positive report on line 15b.

That'll take care of it assuming you don't make any more IRA contributions for 2014.

Rule Your Retirement Home Fool
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