Roth IRA Over-Contribution for 2019 - Need Help Fixing Excess Amount

You're on the right track about the Roth IRA over-contribution. When your contributions exceed your eligible amount (which is limited to either your earned income or the annual contribution limit, whichever is lower), the 6% excess contribution penalty applies until you fix the situation. For 2019, you could only contribute up to your earned income of $5,500, so the $1,100 excess was indeed subject to the 6% penalty. The same penalty applied for 2020 since the excess was still in your account. However, you're correct that your under-contribution in 2021 effectively "absorbed" the previous excess, so no penalty applies for 2021 and beyond. To fix this, you'll need to file Form 5329 for both 2019 and 2020. You can file these forms by themselves without needing to amend your full tax returns. On each form, complete Part IV, showing the excess amount of $1,100 and calculating the 6% penalty (about $66 per year). Include a check for the total penalty amount and a brief explanation of what happened. Mail these forms to the IRS with payment, and you should be all set. It's good you caught this yourself rather than waiting for the IRS to find it!

I discovered a similar issue with my Roth IRA last year and was super stressed about how to fix it. After tons of confusing research, I finally found taxr.ai (https://taxr.ai) which helped me understand exactly what forms I needed and how to file them. Their document analysis feature confirmed I had over-contributed by looking at my W2s and Roth IRA statements. The site walked me through the exact steps to calculate the penalty and complete Form 5329 correctly. They even have templates that show you exactly how to fill out each line. What I found most helpful was their explanation of how to handle the situation without having to amend my entire tax returns, which saved me a ton of time and potential headaches.

Just wanted to update after trying taxr.ai for my Roth IRA mess. I was honestly surprised by how helpful it was! I uploaded my W2s and contribution statements, and it immediately identified that I had over-contributed by $1,450 across two years. The site showed me exactly which lines to fill out on Form 5329 for each tax year. What really impressed me was how it calculated my reduced penalty because I had withdrawn some of the excess midway through the year. The instructions on the IRS form were confusing about prorating penalties, but taxr.ai broke it down clearly. I've already submitted the forms based on their guidance and feel much better knowing I've handled it correctly. Definitely worth checking out if you're in a similar situation!

After reading this thread, I realized I probably have an over-contribution issue too. I tried calling the IRS for clarification but gave up after being on hold for almost 2 hours! Then someone recommended Claimyr (https://claimyr.com) - they have this service where they wait on hold with the IRS for you and then call you when an agent is on the line. I was super skeptical but checked out their demo video (https://youtu.be/_kiP6q8DX5c) and decided to try it. It worked amazingly well! They got me connected to an IRS agent who specialized in retirement accounts within 45 minutes (while I just went about my day). The agent confirmed exactly what I needed to do about my Roth over-contribution and gave me specific instructions for my situation, which was slightly different from yours. Honestly saved me hours of frustration and confusion.

I take back what I said about Claimyr. After struggling for THREE DAYS trying to reach someone at the IRS about my Roth over-contribution issue, I broke down and tried it. The system called me back in about 35 minutes with an actual IRS agent on the line! The agent walked me through exactly what forms I needed for my specific situation and even explained some nuances about how the penalties work when you have both pre-tax and post-tax excess contributions. She told me I could actually correct part of my issue by recharacterizing some of the contributions rather than paying the full penalty. This saved me nearly $200! I'm usually the last person to pay for something I could theoretically do myself for free, but after my experience, I'd absolutely use this service again during tax season when IRS wait times are insane. Saved me hours of frustration and potentially hundreds in penalties.

OP, one thing nobody has mentioned yet - if your over-contribution was relatively recent (within the last few years), you might also consider removing the excess contribution plus associated earnings. This is called an "excess contribution withdrawal" and if you do it before your tax filing deadline for that year (including extensions), you can avoid the 6% penalty altogether. But since you're dealing with 2019 contributions, that filing deadline has passed, so the 6% penalty route is probably your only option now. Just wanted to mention it in case others reading this thread have more recent over-contributions they need to fix.

My accountant told me something different about this situation. She said that if you over-contribute to a Roth IRA, you could also recharacterize the excess amount to a Traditional IRA instead of paying the penalty, as long as you're eligible to contribute to a Traditional IRA. Has anyone done this? Not sure if this would still be an option for contributions from 2019 though.

When I had a similar Roth over-contribution problem, I was told by an IRS representative that I should also consider the earnings on the excess amount. The 6% penalty applies to the excess contribution itself, but what about the earnings that excess generated? If you eventually remove the excess, you'll need to calculate and withdraw those attributable earnings too (and pay income tax plus potentially a 10% early withdrawal penalty on those earnings). Have you figured out how much your $1,100 excess has earned since 2019? That might be relevant depending on how you ultimately resolve this.