M
matter
Guest
I've just discovered that I have overpaid my Roth IRA for tax years 2000 and 2001. Both overpayments add up to $3500! And, due to the penalties, I will have to pay a tax refund instead of receiving a payment.
I seriously doubt that my broker will be able to withdraw the excess amount for tax year 2001 before April 15th. (Many of you who have brokers will understand.)
What options do I have? The only one I really see is to go ahead and submit my 1040 and report the excess contributions for 2000/2001 on a 5329. If I follow this path, pay the penalties, and subsequently withdraw the excess amount from the Roth IRA, how would I go about reporting this correction to the IRS? (Or do I even need to? Will it instead be covered by my broker's 5498 for tax year 2002?)
Do I even have any other real options?
Is possible to underpay my eligible Roth IRA contributions for 2002 and 2003 to balance out with the excess amount? (Though even if I could do this, I don't see much advantage since I will still have to pay tax penalties until the amount is balanced out.)
And I don't see any advantage to filing a 4868 for an extension, since I will apparently still have to go ahead and pay the penalty by 4/15.
For the most part, I'm probably just answering my own questions. But I want to make sure of which options I do have...and to follow the one that will work best in "real life" by being the least likely to incur me becoming involved with any kind of imbroglio with the IRS.
Also, I wonder why this wasn't caught on my year 2000 return. Did it just "get by" or does the IRS not check for excess contribution until the IRA is withdrawn?
And one more question. Will it matter exactly when I withdraw the excess amount...or do I only need to do so by Dec. 31, 2002? I'm asking because my IRA is down right now, and I hate to withdraw the money while it is considerably devalued...especially if there's a possibility that it will return to my "entry" level value by the end of the year, which I think there is.
Sorry for so many questions. Thank you in advance!
I seriously doubt that my broker will be able to withdraw the excess amount for tax year 2001 before April 15th. (Many of you who have brokers will understand.)
What options do I have? The only one I really see is to go ahead and submit my 1040 and report the excess contributions for 2000/2001 on a 5329. If I follow this path, pay the penalties, and subsequently withdraw the excess amount from the Roth IRA, how would I go about reporting this correction to the IRS? (Or do I even need to? Will it instead be covered by my broker's 5498 for tax year 2002?)
Do I even have any other real options?
Is possible to underpay my eligible Roth IRA contributions for 2002 and 2003 to balance out with the excess amount? (Though even if I could do this, I don't see much advantage since I will still have to pay tax penalties until the amount is balanced out.)
And I don't see any advantage to filing a 4868 for an extension, since I will apparently still have to go ahead and pay the penalty by 4/15.
For the most part, I'm probably just answering my own questions. But I want to make sure of which options I do have...and to follow the one that will work best in "real life" by being the least likely to incur me becoming involved with any kind of imbroglio with the IRS.
Also, I wonder why this wasn't caught on my year 2000 return. Did it just "get by" or does the IRS not check for excess contribution until the IRA is withdrawn?
And one more question. Will it matter exactly when I withdraw the excess amount...or do I only need to do so by Dec. 31, 2002? I'm asking because my IRA is down right now, and I hate to withdraw the money while it is considerably devalued...especially if there's a possibility that it will return to my "entry" level value by the end of the year, which I think there is.
Sorry for so many questions. Thank you in advance!