Although we can't advise you on whether or not you should remove an excess
IRA contribution, we can inform you of your options.
To avoid a 6% federal penalty, you must remove the excess contribution by
the correction deadline. Generally, the deadline for removal of an excess
IRA contribution is October 15 of the year following the tax year of that
contribution. If you remove the excess contribution, Vanguard will report
the transaction on IRS Form 1099-R. You may also need to file IRS Form 8606
and/or IRS Form 5329 with the IRS. Your options for handling an excess
* Remove the excess and any attributable earnings before the deadline. You
will not be subject to the 6% penalty. If you have contributed to both a
Roth and a traditional IRA, IRS regulations require you to remove the
excess from your Roth IRA first.
* Remove the excess after the deadline. You cannot remove the attributable
earnings after the deadline has passed. You will be subject to a 6% penalty
tax on the amount of any excess each year it remains in your account.
* Leave the excess amount along with any earnings in the IRA and apply it
to a later year. Vanguard will not change any account records or report any
additional information to the IRS. You will be subject to the 6% penalty on
the excess amount for each year that it remains in the IRA as an excess
To request removal of an excess contribution, please complete and return
the Vanguard IRA and ESA Excess Contribution Removal Form, which you can
access though the following link:http://personal.vanguard.com/us/literat ... counts/ira
If you have questions related to your specific situation, please consult
with a tax professional or the IRS.