The Internal Revenue Service used to go easy on mistakes made with Individual Retirement Accounts and Roth plans. Not anymore.
An IRS report listed $300 million in uncollected taxes because the agency failed to focus on withdrawal and contribution mistakes in the accounts. According the Wall Street Journal, a crackdown is coming, in the form of audits and mandatory paperwork.
What IRS is looking at:
- Failing to take a required minimum distribution for those 70 1/2 years old, as well as for those who inherit an account, and
- Exceeding the contribution limits for traditional and Roth IRAs, which are $5,000 per person, or $6,000 for those 50 or older, or contributions that exceed an individual’s taxable compensation for the year.
- Those failing to take a required minimum distribution can be forced to pay 50% of the amount they should’ve withdrawn, and
- Those contributing too much can be made to pay back 6% of the amount that wasn’t supposed to have been contributed.