Excess Roth contribution

[Jesse]

Someone made $6,500 contributions to a Roth IRA in 2007. He is only 38 so should only have contributed up to $4,000. I will suggest he take the excess out, but if he does not will there be further penalties in future years?

[ChEAr$]

All he need to

Someone made $6,500 contributions to a Roth IRA in 2007. He is only 38 so should only have contributed up to $4,000. I will suggest he take the excess out, but if he does not will there be further penalties in future years?

is instruct the custodian/trustee to reassign the extra amount to tax year 2008, but of course before April 15th.

[JoshinNC]

Assuming at least $2500 was contributed

is instruct the custodian/trustee to reassign the extra amount to tax year 2008, but of course before April 15th.

in 2008 for 2007. If it was all contributed in 2007 the TP must get the money back from teh custodian and then "recontribute" for 2008.

[KBTS]

Penalties

Yes, the 6% penalty for excess contributions will apply for every year that any part of the excess amount remains in the Roth.

[Jesse]

Yes, the 6% penalty for excess contributions will apply for every year that any part of the excess amount remains in the Roth.

Thanks all, this is what I was looking for, whether it applies to the current year only or every year after. I know what he needs to do, this will give him more incentive than the consequences of just the current year to make him listen to me.