Take the 2-minute tour ×
Personal Finance & Money Stack Exchange is a question and answer site for people who want to be financially literate. It's 100% free, no registration required.

Directly from the IRS:

Contributions not reported. You do not report Roth IRA contributions on your return.

If that's the case, then how does the IRS make sure people don't exploit the system? (E.g. having multiple Roth IRA accounts with different brokerages and maxing them all out every year).

I feel like my knowledge of the tax system is so limited that I'm missing something super obvious. What am I missing?

share|improve this question

1 Answer 1

up vote 14 down vote accepted

You do not report the Roth IRA on your 1040 because it has no implication to your current tax situation (as you fund it with after-tax dollars). Your IRA custodian(s) would report the contributions to the IRS on form 5948, which would then be used to determine if all of your contributions for the tax year were under the Roth IRA limits.

If you did over-contribute, you are subject to a penalty, per year, of 6% of the above-the-limit amount; so if you contributed $6,000, and your limit was $5,500, you may be subject to a penalty of .06*500 or $30 per year until you correct the over-contribution (by withdrawing the over amount plus its portion of the IRA's gains, paying taxes on the gains, and paying any early withdrawal penalties if applicable). (Credit to Osa E for the explanatory link in comments.)

share|improve this answer
    
Is there usually some way to acquire/request the Form 5948s that have been filed on my behalf over the years? (From either the brokerage or the IRS) I'd like to check to make sure I haven't overcontributed. –  rinogo Apr 14 at 6:58
3  
They send you a copy of the form: Due dates. Furnish Copy B of this form to the participant by June 1... File Copy A of this form with the IRS by June 1... –  mhoran_psprep Apr 14 at 9:47
    
You also can probably call the IRS and ask for copies to be sent to you, although I don't know if form 5948 is covered in the set of forms they'll send you for free (like 1040 and W-2). –  Joe Apr 14 at 15:03
1  
You can always ask the custodian send you copies, most have them online. –  littleadv Apr 14 at 15:32
1  
Penalties - 6% for each year not fixed. fairmark.com/retirement/roth-accounts/… –  Osa E Apr 14 at 16:30

Your Answer

 
discard

By posting your answer, you agree to the privacy policy and terms of service.

Not the answer you're looking for? Browse other questions tagged or ask your own question.