By www.RetirementDictionary.com staff
If such is the case, you must either: recharacterize the excess contribution to a traditional IRA – which can be done only if you are under age 70½ as of the end of the year for which the contribution was made, or distribute the amount as a ‘return of excess contribution’
Whichever option you choose, it must be done by your tax filing due date, plus extensions.
If you filed your tax return by the due date, you received an automatic 6-months extension to perform either the recharacterization or the return of excess contribution. Failure to do either by the deadline will result in you owing the IRS a 6% excise tax for every year the amount remains in the Roth IRA as an excess contribution.
Note: An excess Roth IRA contribution that remains in your Roth IRA after the deadline automatically becomes a Roth IRA contribution for the following year, and continues to roll over to future years until the amount is no longer an excess.
Please contact your financial or tax advisor for assistance with determining whether your Roth IRA contribution is an excess contribution, and if so, how you should proceed.