Roth IRA ineligible contribution past deadline

Question

Hey all, much appreciate the help.

Just realized I’m ineligible for 2023 and 2024 Roth contributions.

I’ve already had my brokerage distribute my 2023 contributions. And 2024 contributions + earnings recharacterized to traditional ira (will backdoor)

My questions for 2023 tax return. When I amend the tax return, is form 5329 the only one I need to fill out? I’ll need to pay 6% excise tax. When I do my 2024 tax returns in January, will I need to again file 5329 and pay another 6% excise tax since the 2023 contributions sat in the Roth for almost 2 years? (When exactly is the cutoff day, in Oct or last day of the year)

For 2024 tax returns, I will not need to pay 6% excise tax since I pulled out the contributions this year. Do I need to file form 5329 for my 2024 Roth contributions?

MatthewD · Answer

Hi Taxnoob,

Our software is very accurate at generating the correct required forms based on the information you entered.

Form 5329 is used to calculate penalties on a variety of retirement situation, from early distributions to over contributions.

Form 8606 is used to:

* Report nondeductible contributions to an IRA. 
* Report non-qualified distributions taken from a Roth IRA.
* Report distributions taken from an IRA in years when you made nondeductible contributions.
* Provide information such as name, address, Social Security number, contribution amounts, and converted assets, like a IRA to Roth conversion, for example a backdoor Roth conversion.

taxnoob · Answer

thanks Matthew. Question, isn’t form 8606 only applicable if I contribute to the traditional IRA, which I didn’t in 2023.

I started amending my 2023 returns but did not click submit yet. I’m hesitant because it did not generate or mention form 5329. But you did say that it won’t generate, just wondering why since it’s required to mail it in.

Also for my 2023 Roth contribution, do you know if I will incur a 6% excise tax for the year 2024. I can’t seem to find this info only on whether the cutoff day is The Oct tax filing deadline or last day of the year.

MatthewD · Answer

Hi Taxnoob,

When you amend 2023, form 5329 and Form 8606 will be used.  For 2024, you withdrew the contributions in time and will only report any earnings.  Report the 1099-R and the software will generate the proper forms for you.  I don't think a form 5329 or 8606 will be generate.  The Form 1040 may report some retirement earnings.

You will likely need to report the 2023 Roth 1099-R on 2024 as well, since that correction was done in 2024 and that will generate a 5329 and 8606.