Skip to main content
Message Font: Serif | Sans-Serif
No. of Recommendations: 0
>>> 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,

Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.