Excess Roth Contribution

I recently figured out that I had left off some taxable income on my 2006 taxes. This in turn caused a problem with my 2006 Roth and made it an excessive contribution. I do not have a problem with filing 1040ex with all the necessary forms including the form 5329 that IRS charges 6% of the excess contribution for 2006.

My question is how do I get rid of the excess contribution on my 2007 tax form. I think (but don't know for sure) is that I ask my mutual fund that has the excess contribution to return it to me as a corrective distribution and send it to me with a 1099R. I don't believe that I have to take out the earnings that the excess contribution made since 2006 since I am doing this as a corrective distribution in a later year. ( I guess the 6% tax the first year on the excess contribution is all IRS wants if you don't do a corrective distribution by the deadlines). Again, I am unsure of that. it also appears that the corrective distribution goes on the 2007 Form 5329 line 20 to show the withdrawl of the excess contribution thus avoid another 6% IRS penalty.

I use turbo tax and did a fake entry of a 1099R to see how everything played out. Turbo tax did not put the amount into Form 5329 line 20 and I don't know why. The 1099R should have a code of "P" to make that happen. Any ideas why turbo tax is working as I suspect it should.

Any and all help and confirmation that I have this figured out or not figured this out would be appreciated.

Thank You

Ftoddt77,

You need to discuss this with your IRA Custodian/Mutual Fund.
The mutual fund will determine the amount earnings that you need to withdrawl.

You can read more in IRS Pub 590 Individual Retirement Arrangements, page 51, Deducting An Excess Contribution In a Later Year.

While this is in the section of the pub primarily discussing Traditional IRAs, the basic rules cover all types of IRAs.