I exceeded 2009 ira contribution limit, what do i need to do?

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duran

I exceeded 2009 ira contribution limit, what do i need to do?

i mistakenly made two contributions to both a traditional ira and roth ira that put me over the $5000 limit. i know i will pay a penalty and i need to w/d the execess amount plus any earned money on the execess. who calculates the earned money, me (most likely) or the bank and does it have to be exact? it has been in a mm fund so it will only be a few dollars at most.

cainvest1

http://www.irs.gov/publications/p590/ch01.html#en_US_publink1000230873

Tax on Excess Contributions
In general, if the excess contributions for a year are not withdrawn by the date your return for the year is due (including extensions), you are subject to a 6% tax. You must pay the 6% tax each year on excess amounts that remain in your traditional IRA at the end of your tax year. The tax cannot be more than 6% of the combined value of all your IRAs as of the end of your tax year.

The additional tax is figured on Form 5329. For information on filing Form 5329, see Reporting Additional Taxes , later.

hrblockerrolquinn

Dear Duran: Calculate the excess interest the best you can and document it in case the IRS ever asks. For a few dollars I think you will be fine. With draw the excess ASAP. If you have a broker they will help you if not with draw at least the excess over $5000.

This advice was prepared based on the tax law in effect at the time it was written as it applies to the facts that you provided. Click on my profile to read more. Errol Quinn Enrolled Agent.

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