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Old 04-06-11, 06:41 PM   #1
spinnaker
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Roth IRA Excess Contribution?

Any U.S. tax experts out there?

I discovered that I made an excess contribution made to my Roth IRA. I had my mutual fund company roll the excess plus the earnings into my 2011 Roth IRA contributions.

Since I did not take the earnings do I still need to pay the penalty and pay taxes on the earnings for 2010? I can't seem to get a clear answer on various searches I have done.


BTW I am 51 years old so I am under the 59.5 mark.
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Old 04-06-11, 07:40 PM   #2
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Depending on the timing and status of your 2010 contribution, you may be able to get the 2011 (or part of it) reclassified as an '10 contribution. If you can do that, it may help you out.
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Old 04-06-11, 07:51 PM   #3
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Depending on the timing and status of your 2010 contribution, you may be able to get the 2011 (or part of it) reclassified as an '10 contribution. If you can do that, it may help you out.
I think to "reclassify", you need to be eligible for a traditional IRA? I do not qualify because I have a 401K at work. And I did not have the excess contribution in 2011, it was in 2010. 2011 is not a problem so far.
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Old 04-06-11, 07:55 PM   #4
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I think to "reclassify", you need to be eligible for a traditional IRA? I do not qualify because I have a 401K at work. And I did not have the excess contribution in 2011, it was in 2010. 2011 is not a problem so far.
No, if you make under a certain $ amount, you can contribute to an IRA in addition to your 401K. I'd have to look up the earnings limitation, but you can do that at the IRS site as well.
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Old 04-06-11, 08:01 PM   #5
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No, if you make under a certain $ amount, you can contribute to an IRA in addition to your 401K. I'd have to look up the earnings limitation, but you can do that at the IRS site as well.

They only limit I seem to be able to find is for age. For my age the combined limit is $6,000.
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Old 04-06-11, 08:04 PM   #6
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I found the income amount here
http://www.irs.gov/retirement/partic...202518,00.html

I can contribute up to the limit of $6,000.
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Old 04-06-11, 08:05 PM   #7
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I guess my question still stands. Since I reapplied it to a Roth for 2011 do I need to bay tax and penalty on the income?
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Old 04-06-11, 08:08 PM   #8
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I guess my question still stands. Since I reapplied it to a Roth for 2011 do I need to bay tax and penalty on the income?
I think that part is correct if you converted to a Roth. Since a Roth is post-tax dollars rather then pre-tax dollars. Sorry, I didn't read the roth part in your title the first time.
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Old 04-06-11, 08:26 PM   #9
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Did not convert. Excess contribution was made to a 2010 Roth. I had the excess and the earnings applied to 2011 Roth.
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Old 04-07-11, 07:19 AM   #10
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The Roth IRA is AFTER TAX income, so there should be no penalty or additional tax. It's the regular IRA that the penalties apply to.
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Old 04-07-11, 07:53 AM   #11
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The Roth IRA is AFTER TAX income, so there should be no penalty or additional tax. It's the regular IRA that the penalties apply to.
There is a limit to the $'s you can contribute to a Roth each year. If you contribute over that amount, there are ramifications.
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Old 04-07-11, 04:45 PM   #12
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Well I stopped into the IRA office today and even they could not tell me for sure!! All they did was go to the website and read what i read which is ambiguous. Taxes should not be this complicated! I'm am thinking I do owe on the profit because I did not pay taxes on that yet. But on the other hand if the profits are rolled back into 2011 then I might be paying that tax once I cash in the Roth.

I'm going to call my mutual fund company again tomorrow and make sure they have not submitted any kind of document to the IRS. If they have not then I am not going to worry about it.
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