FY2003 ROTH IRA Contribution

[Guest dcentguy]

I contributed $3000 to my ROTH IRA even though I didn't have any income FY2003.

Do I need to do anything, at all?

Can i ask my broker to change that $3000 contribution to be for FY2004 instead of FY2003?

What are my options?

Thanks

[John G]

If your spouse had income in 2003, you might be covered. But if not, and you contributed the money in 2004, you might be able to get your broker to reclassify it for 2004.

If the contribution was made in 2003 it has probably already been reported by the custodian to the IRS. In this case you ask (probably by letter) that your custodian return the funds.... even if you are just turning around a redepositing them for a subsequent year. Custodians have procedures for determining the earnings on the $3k which also must be removed. Expect a small penalty - I don't know if the IRS waives penalties if you get things corrected soon.

Start by phone calling your custodian - talk with the IRA department - and that will be nearly impossible today, April 15. They can guide you about the procedures.

[Appleby]

…technically, if you filed your 2003 return on time, you had until October 15,2004 to remove the excess without penalties. Since you did not remove the excess by that deadline, you owe the IRS a penalty of 6 percent of the excess amount ($180). This penalty is reported and calculated on IRS Form 5329

Also, since you did not remove the excess by the deadline, it was automatically designated/treated ( for tax purposes) as a 2004 Roth IRA contribution…therefore, for all intent and purposes, you already have a 2004 $3,000 Roth IRA contribution.

The only way to avoid the 6-percent is if your financial insititition is able to do what John suggested in his second sentence- however, if your contribution was clearly designated as a 2003 contribution-that may not even be an option