taxmap/instr2/i5329-008.htm#TXMP3a836263
Part IV—Additional Tax on Excess Contributions to Roth IRAs

If you contributed more to your Roth IRA for 2008 than is allowable or you had an amount on line 25 of your 2007 Form 5329, you may owe this tax. But you may be able to avoid the tax on any 2008 excess contributions (see the instructions for line 23 that begin on this page).

Enter the amount from line 24 of your 2007 Form 5329 only if the amount on line 25 of your 2007 Form 5329 is more than zero.

If you contributed less to your Roth IRAs for 2008 than your contribution limit for Roth IRAs, enter the difference. Your contribution limit for Roth IRAs is generally your contribution limit for traditional IRAs (see the instructions for line 10 that begin on page 3) reduced by the amount you contributed to traditional IRAs. But your contribution limit for Roth IRAs may be further reduced or eliminated if your modified AGI for Roth IRA purposes is over:

• $159,000 if married filing jointly or qualifying widow(er),
• $0 if married filing separately and you lived with your spouse at any time in 2008, or
• $101,000 for any other taxpayer.

See Pub. 590 for details.

Generally, enter the amount from Form 8606, line 19, plus any qualified distributions. But if you withdrew the entire balance of all your Roth IRAs, do not enter less than the amount on Form 5329, line 18 (see Example).

You contributed $1,000 to a Roth IRA in 2006, your only contribution to Roth IRAs. In 2008, you discovered you were not eligible to contribute to a Roth IRA in 2006. On September 9, 2008, you withdrew $800, the entire balance in the Roth IRA. You must file Form 5329 for 2006 and 2007 to pay the additional taxes for those years. When you complete Form 5329 for 2008, you enter $1,000 (not $800) on line 20, because you withdrew the entire balance.

Enter the excess of your contributions to Roth IRAs for 2008 (unless withdrawn—see below) over your contribution limit for Roth IRAs (see the instructions for line 19 on this page).

Any amounts converted (including any amounts rolled over from a qualified retirement plan) to a Roth IRA are excess Roth IRA contributions if your modified AGI for Roth IRA purposes is over $100,000 or your filing status is married filing separately and you lived with your spouse at any time in 2008. See Recharacterizations in the Instructions for Form 8606 for details. Do not include rollovers from another Roth IRA or designated Roth account in figuring your excess contributions.

You can withdraw some or all of your excess contributions for 2008 and they will not be treated as having been contributed if:

• You make the withdrawal by the due date, including extensions, of your 2008 tax return, and
• You withdraw any earnings on the withdrawn contributions and include the earnings in gross income (see the Instructions for Form 8606 for details). Also, if you had not reached age 59 at the time of the withdrawal, include the earnings as an early distribution on line 1 of Form 5329 for the year in which you report the earnings. taxmap/instr2/i5329-008.htm#TXMP04e9860f
  Note.. A Form 5329 is not required if the excess Roth IRA contributions are not treated as having been contributed and you do not have any earnings to report as early distributions on the form.
  
  

If you timely filed your return without withdrawing the excess contributions, you can still make the withdrawal no later than 6 months after the due date of your tax return, excluding extensions. If you do, file an amended return with Filed pursuant to section 301.9100-2 written at the top. Report any related earnings for 2008 on the amended return and include an explanation of the withdrawal. Make any other necessary changes on the amended return (for example, if you reported the contributions as excess contributions on your original return, include an amended Form 5329 reflecting that the withdrawn contributions are no longer treated as having been contributed).