Question

Accidental early IRA distribution turned rollover

Forum|Forum|2 years ago
March 12, 2024
1 reply
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Hi!

I contributed the maximum to my traditional IRA back in early 2023. I am in the middle of filing taxes for year 2023. I accidentally thought that I was ineligible to contribute to IRA, and that the way to rectify the overcontribution was to take a distribution of the amount plus gains, so I did that (in early 2024).

Now I want to re-contribute the max back to my IRA for 2023, and consider the whole thing a rollover, since it's within 60 days. This is what my IRA account provider (vanguard) suggested. But I can't put back the gains, and so I need to report them as income on my 2023 tax return. I did not receive a form 1099-R because the distribution (and re-contribution) happened in 2024.

First, does all of this make sense, and is the plan to re-contribute (rather than pay an early distribution penalty of 10%) a good one?

Second, how do I report the gains in turbotax? I don't have a 1099-R, and I don't see anywhere else to put that in.

Thank you so much!

TurboTax Deluxe Online

T

ThomasM125

It would make good sense to make the IRA contribution to save taxes. To report the earnings on the premature contribution in 2023, you need to enter a substitute Form 1099-R in your 2023 tax return. You can do that as follows:

Go to the personal income section of TurboTax
Find the Retirement Plans and Social Security menu option
Start or Update IRA, 401(k), Pension Plan Withdrawals (1099-R)
Choose Add Another 1099-R
Choose I'll type it in myself
On the screen that says Tell Us Which 1099-R You Have choose I need to prepare a Substitute 1099-R
Enter the distribution amount in box 1 of the substitute 1099-R
Enter the earnings in box 2(a)
Enter code "P" in box 7
When asked about the year on the form 1099-R, say it is for the year following the year you are working on