Roth IRA contributions

[jpettigrew]

What would you do if a client just now informs you that they have had a Roth IRA since 2008.  They have filed MFS all those years which made the Roth contributions as an excess contribution.  Would you file amended returns for all the years or pay the 6% penalty?  How far back can you amend returns?  Thank you for your help.

JP

[sjrcpa · Accepted solution]

There never was a deduction so nothing to amend. 5329s are due for all those years and can be filed on their own. Excess contributions and earnings thereon need to be withdrawn to stop the penalty clock.

[jpettigrew]

When I referred to an amended return, I was asking if amending it to MFJ would then allow them to avoid the 6% excise tax.  Could I do that?  

[rbynaker]

And it's worth noting that the 5329 amounts do snowball.  So an excess contribution in 2015 is still an excess contribution in 2016 (part IV line 18), add the 2016 amount, then the 2016 total carries to 2017, add the 2017, carry to 2018 and so on.

I haven't done the research but I've heard that 5329s have their own statute of limitations.  So if one was never filed in the earlier years, the clock never starts running.  I've seen some CPE folks recommend that you file a $0 form every year just in case something like this comes up.  I filed that information in my brain under "things I heard that I don't necessarily believe" but I've never had one go more than three years back so I've never had to research it.

Rick

[rbynaker]

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@jpettigrew wrote:

When I referred to an amended return, I was asking if amending it to MFJ would then allow them to avoid the 6% excise tax.  Could I do that?  

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I think you could probably go back to 2016.  I always have to use my fingers for these things...2016 was due 4/15/17 + 3 years is 18, 19, 20.  So should be open to amend until at least 4/15/20.

[sjrcpa]

Maybe. But not for closed years.