Question

Which of the following corrective actions is not available after the tax filing date to a person who made excess contributions to his traditional IRA in 2017?

(1) Carry forward the excess contributions of contribution to future years and withdraw before filing 2017 tax return including extension.

(2) Do not withdraw the net income attributable to excess contributions in 2017 fun traditional IRA.

(3) Withdraw the excess contributions in 2017 from the traditional IRA.

(4) Withdraw the net income attributable to the excess contributions in 2017 from the traditional IRA.

Answer 1

If you discover it after you've filed your tax return

You can either:

• Remove the excess within 6 months and file an amended return by October 15.
• Reduce next year's contributions by the amount of the excess. For example, if your limit is $5,500 and you exceed it by $1,500 in the current year, you can offset the excess by limiting your contributions to $4,000 the following year.

Be aware that when you "carry forward" an excess to a future year, you'll have to pay a 6% penalty until the excess is absorbed or corrected.

Therefore option 1is the corrective action.