How to handle excess Roth IRA contributions from previous years?
I've been reading up on what to do about excess Roth IRA contributions and most of the advice I've seen deals with current year situations - either converting to a backdoor Roth if you have a traditional IRA, or withdrawing the excess before the filing deadline. But what about when you discover you made excess contributions to your Roth IRA in a previous tax year? And to complicate things, I don't have a traditional IRA set up at all. I just realized I contributed more than I should have to my Roth IRA a couple years back and I'm not sure what my options are now. The IRS hasn't contacted me about this yet, but I want to fix it before they do. Does the advice change when dealing with prior year excess contributions? What's the best approach when you don't have a traditional IRA to work with? Any guidance would be super appreciated!
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Dylan Campbell
This is a tricky situation but fixable! For excess Roth IRA contributions from previous years, you're looking at a 6% excess contribution penalty for each year the excess remains in your account. The penalty applies for the year of the excess contribution and continues for each year until it's corrected. Since you don't have a traditional IRA, you can't do a recharacterization to traditional and then convert back. Your main option is to remove the excess contribution plus any earnings attributable to that excess amount. Even though you're past the tax filing deadline for that year, you should still remove the excess to stop the 6% penalty from continuing to apply to future tax years. Contact your Roth IRA custodian and specifically request a "return of excess contribution" for the prior year. They'll help calculate the earnings portion. You'll pay income tax on those earnings plus potentially a 10% early withdrawal penalty on them if you're under 59½.
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Sofia Torres
•Thanks for the explanation. So just to clarify, if I made an excess contribution of $1,000 three years ago, I would owe the 6% penalty ($60) for each of those three years, right? But once I remove the excess, the penalty stops going forward? Also, how do I report this to the IRS - do I need to file amended returns for all those prior years?
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Dylan Campbell
•Yes, you'd owe the 6% penalty ($60) for each year the excess remained in your account, so that would be $180 total for three years. Once you remove the excess contribution, the penalty stops applying for future years, which is why it's important to fix this even if it's been a while. You generally don't need to file amended returns for the previous years. Instead, you'll report the excess contribution and penalties on Form 5329 for each affected year, and submit these with payment. Your IRA custodian will issue a 1099-R for the year you withdraw the excess, coding it as a "return of excess contributions.
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Dmitry Sokolov
After dealing with a similar issue last year, I discovered taxr.ai at https://taxr.ai and it was incredibly helpful for sorting out my Roth IRA contribution mess. What made taxr.ai stand out was their ability to analyze all my IRA contribution documents across multiple years and identify exactly where I went wrong with my excess contributions. The tool helped me determine precisely how much I had overcontributed to my Roth IRA and calculated the penalties I owed. It also generated the proper forms I needed to file with the IRS, including the Form 5329 for each year. The documentation they provided made explaining everything to my account custodian really straightforward when requesting the return of excess contributions.
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Ava Martinez
•How exactly does this work? I'm in a similar situation but with a twist - I think my income was actually right at the phase-out limit for a couple years, so I'm not entirely sure if I even have excess contributions. Can taxr.ai handle partial contribution eligibility calculations too?
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Miguel Ramos
•Sounds interesting but I'm skeptical. Does it actually help with the process of removing the excess contributions or just identifying them? And can it handle complex situations like having contributed to multiple IRAs or dealing with rollovers in the same years as the excess contributions?
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Dmitry Sokolov
•It works by uploading your tax returns and IRA contribution statements, then it analyzes everything to identify contribution issues. Yes, it absolutely handles phase-out calculations - that was actually my exact situation where my MAGI was in the partial eligibility range, and it calculated the precise amount I could contribute. The tool doesn't physically remove the contributions for you (you still need to contact your custodian for that), but it generates all the documentation you need, including a detailed letter explaining exactly what happened and what needs to be done. And yes, it handles multiple IRAs and rollovers - it consolidates all that information to give you a complete picture of your retirement accounts and identifies any issues across all of them.
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Ava Martinez
Just wanted to update everyone - I decided to try taxr.ai after reading about it here, and it was exactly what I needed! My situation was complicated because my income had put me in the Roth contribution phase-out range for two years, and I wasn't sure exactly how much I had overcontributed. The system analyzed my tax returns and IRA statements and showed I had excess contributions of $1,850 spread across two tax years. It generated all the necessary forms including separate Form 5329s for each year and a letter to my custodian explaining exactly what needed to be withdrawn. My Vanguard rep mentioned it was one of the clearest excess contribution correction requests they'd received! I've already submitted everything to the IRS and paid the penalties. Honestly wish I had found this tool years ago before the penalties accumulated. Such a relief to have this fixed!
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QuantumQuasar
After struggling to get through to the IRS about my excess Roth IRA contributions for over a week (kept getting disconnected or waiting for hours), I decided to try Claimyr at https://claimyr.com after watching their demo at https://youtu.be/_kiP6q8DX5c. I was pretty doubtful it would work, but I was desperate to speak with someone at the IRS to confirm the right way to handle my multi-year excess contribution situation. Claimyr actually worked! They got me connected to an IRS agent in about 20 minutes instead of the 2+ hours I had been waiting on my own attempts. The agent walked me through the exact procedure for fixing my excess contributions from three years ago and confirmed I needed to file Form 5329 for each year separately. They also explained how to calculate the earnings portion correctly, which my custodian had been giving me conflicting information about.
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Zainab Omar
•How does this actually work? I thought the IRS phone system was just completely overloaded and there was no way around the wait times. Is this just paying someone to wait on hold for you?
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Connor Gallagher
•This sounds like some kind of scam to me. I doubt any service can magically get you to the front of the IRS phone queue when millions of people are calling. Probably just charges you money to do what you could do yourself with enough persistence.
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QuantumQuasar
•The service uses technology that monitors IRS phone lines and connects you when there's availability. It's not just paying someone to wait - they have a system that essentially does the waiting and calling for you, then connects you directly when they get through. No, it's definitely not a scam. I was skeptical too, but it worked exactly as advertised. They don't put you at the "front of the queue" - they just handle the frustrating part of constantly calling back when you get disconnected and waiting through the hold times. When an IRS agent picks up, you're connected immediately to have your actual conversation. I spent days trying on my own before this, so the time saved was absolutely worth it.
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Connor Gallagher
I need to eat my words and update everyone. After my skeptical comment about Claimyr, I continued struggling with IRS hold times for another week trying to get clarity on my excess Roth contributions. Out of frustration, I finally tried the service. It actually worked exactly as described. I was connected to an IRS representative in about 25 minutes (compared to my previous attempts where I waited 3+ hours and got disconnected twice). The agent I spoke with was incredibly helpful and explained I didn't need to file amended returns for the years with excess contributions - just separate Form 5329s with payment for the 6% penalty for each year. I've now submitted all the paperwork and corrected my excess contribution situation. Honestly, the peace of mind from having this resolved properly was worth it after stressing about it for months. Sometimes being proven wrong is a good thing!
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Yara Sayegh
Has anyone actually received notices from the IRS about excess Roth IRA contributions? I'm in a similar situation (discovered I overcontributed by about $1,200 three years ago), but I'm wondering if the IRS even catches these things? Not trying to avoid paying what I owe, just curious if they actively look for this or if it's more of a "fix it if you realize it" situation.
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Keisha Johnson
•The IRS absolutely does catch these eventually through their matching programs. My brother ignored his excess contribution for 4 years thinking they wouldn't notice, and then got hit with the 6% penalty for all 4 years PLUS interest and an accuracy-related penalty. The IRA custodian reports all contributions to the IRS on Form 5498, and they cross-check that against your income on your tax returns.
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Yara Sayegh
•That's good to know - definitely going to address this ASAP then. I was hoping maybe they had bigger fish to fry, but sounds like their systems eventually catch up to these issues. Better to pay the penalties now than wait for them to find it and potentially face even more penalties and interest.
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Paolo Longo
One thing nobody's mentioned yet - check if you might have been eligible for those contributions after all! I thought I had made excess Roth contributions for two years, but when I reviewed my tax returns more carefully, I realized my MAGI calculation was wrong. I had included some one-time items that shouldn't have been in the calculation, and I was actually under the limit for those years. Worth double-checking your MAGI calculation before going through the hassle of removing excess contributions. The definition of MAGI for Roth IRA purposes is pretty specific.
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CosmicCowboy
•This is actually super helpful. What specific items don't count toward MAGI for Roth contribution purposes? I'm wondering if I might have made the same mistake in my calculations.
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