Question

Which of the following statements about excess contributions is correct? Excess contributions and earnings thereon that are carried forward are subject to the 6% excise tax in every year that they are labeled excess contributions at year-end. O A. O B. Excess contributions may be carried back or carried forward. Excess contributions that are carried forward are subject to the 6% excise tax in every year that they are labeled excess contributions at year-end. C. Excess contributions that are carried forward are subject to the 6% excise tax only in the first year that they are labeled excess contributions O D.

Answer 1

SOLUTION

Meaning

An excess contribution occurs when you put more money into your individual retirement account (IRA) than allowed by Law

Provision Regarding Excess Contribution

One Can withdraw the excess amount plus earnings by the due date of tax return, or till extensions if any.

If one leaves excess contribution in IRA then 6% excise tax on that amount is payable ever year till than that excess contributiion remains in the account

Therefor in the view of above OPTION C

i.e excess contrbution that are carried forward are subject to 6% excise tax in every year that they are labled as excess contibution in year end.