Excess Roth Ira Contribution & Earnings

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Joined: Fri Aug 24, 2007 12:32 pm

Excess Roth Ira Contribution & Earnings

Postby RPC1976 » Thu Apr 04, 2013 12:08 pm

I have a excess Roth Ira contribution of $2820 and Earnings of $565 in 2012. Filing jointly.
I have contacted Vanguard and on April 1, 2013 - excess as well as earnings have been transferred towards 2013 Roth Ira contribution $ 3385.
I have contributed $6000 in Roth Ira and due to income limitations, I have this situation.
My wife excess Roth Ira contribution of $2820 and earnings of $583 have been transferred from Roth Ira towards traditional Ira on April 1, 2013 at Vanguard.


1. How do I report earnings of $565 in 2012 return?
2. How do I report excess contribution of $2820 - mine on 2012 returns? How do I tell IRS that I have moved excess contribution and earnings towards 2013 Roth Ira?
3. Is earnings reported in 2013 returns?

I have read some of the other posts regarding this subject and have called IRS but I am still confused.

Please help mw with detail explanations and forms and lines - where and how to report above information.
Thank you in advance for your help.


Alan S.
Posts: 6705
Joined: Mon May 16, 2011 6:07 pm
Location: Prescott, AZ

Re: Excess Roth Ira Contribution & Earnings

Postby Alan S. » Thu Apr 04, 2013 1:46 pm

I assume first 3 statements apply to you and only the final one to your wife. Also, that you made your contribution IN 2012, not 2013. If so,

1) For you - as explained you VG has processed a return of your 2,820 excess with earnings, but instead of sending you the money, the total was applied as a 2013 Roth contribution. If so, you would report the earnings of $565. on line 15b of Form 1040. There would be a 10% penalty on this on line 58 as well. Attach an explanatory statement with your return explaining the amount and dates of the withdrawal of the excess contribution of 2820, and the amount it was worth when withdrawn (3385). Do not mention the 2013 contribution it was used for.

2) For your wife - assuming that either one of you is covered by a retirement plan at work, her recharacterization would result in her TIRA contribution FOR 2012 not being deductible. She would report 2,820 as a non deductible contribution on Form 8606 for 2012. Also an explanatory statement indicating the date and amount of the excess Roth contribution and the date and amount it was worth when recharacterized as a TIRA contribution.

Nothing will be reported on your 2013 return, even though you both with get 1099R forms in Jan, 2014. They will be coded to indicate that the corrective distribution and recharacterization respectively apply to 2012 and you will have completed the reporting on your 2012 return.

If any of my assumptions are incorrect, please advise.

Posts: 34
Joined: Fri Aug 24, 2007 12:32 pm

Re: Excess Roth Ira Contribution & Earnings

Postby RPC1976 » Thu Apr 04, 2013 2:36 pm

Thank you for your reply.
Your assumptions are correct. I have additional questions:
1. How can I avoid 10% penalty on line 58 because I am 60 years old?
2. My wife is not covered by retirement plan, that's why I did recharacterization and it did allow as "deductible TIRA"
I used Turbo tax - is this incorrect?
3.Because I added $565 earnings on line 15B (used substitute 1099R coded line 7 "J, P " for 2013), now my wife is excess Roth Ira contribution by $340 (over $2820 original) and additional tax of $20.
Do I need to call Vanguard again and tell them to transfer additional $340 from 2012 Roth Ira to TIRA to avoid $20 or pay 6% penalty?
4. Is earnings of $565 plus $2820 mine taxable to NJ?

Please review above and let me know your comments.
Once again thank you for your time.


Posts: 34
Joined: Fri Aug 24, 2007 12:32 pm

Re: Excess Roth Ira Contribution & Earnings

Postby RPC1976 » Fri Apr 05, 2013 2:06 pm

Bumped up to receive feed back from Alan or others.
Thank you.

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