removing excess sep IRA contribution
client made excess contribution to Sep in calendar yr 2018 on behalf of 2018. Has filed for extension due 10/15/19, and just learned of excess contribution.
Can the excess be applied to 2019?
How is it achieved (both the CPA’s and broker’s role)?
What are the taxes and penalties if any?
Permalink Submitted by Alan - IRA critic on Fri, 2019-10-04 19:14
Since the deadline for removing the excess with allocated earnings is 10/15/2019 for a 2018 contribution when on extension, it would be better to get this done ASAP. Otherwise, the 10% excise tax for the excess amount (treated as a non deductible contribution) will be due for 2018 on Form 5330. The non deductible excess would then be carried forward to 2019 and could be absorbed as a 2019 SEP contribution by contributing less for 2019.