Question

Non-Taxable Roth IRA Distribution Being Taxed and Penalized

Forum|Forum|4 years ago
January 19, 2022
1 reply
0 views

I took a distribution from my Roth IRA in 2021. The entire distribution amount was my own contributions from 2019 and 2020 (I did not contribute in 2021). My 1099R shows the taxable amount is zero which is what I expected since the entire distribution amount was my own contributions, but after completing the federal section in Turbo Tax I am being taxed and penalized on my entire distribution. Why? I was not expecting to pay any taxes nor any penalties since the entire distribution amount was my own contributions. Thanks.

Critter-3

Ok ... return to the 1099-R input screen and carefully review all your entries especially the follow up questions about basis after the form entry ... you obviously miss a couple of screens.

Also ... do NOT enter a zero in box 2a ... that will mess up the program's calculations. And box 2b should be checked.

D

daroneverhartAuthor

Thanks for the helpful response. So I went back in and removed the "0.00" from box 2a, leaving the box blank. And I did notice that a follow-up question regarding how much prior year contributions remained in the Roth IRA I had an incorrect number. That changed my results somewhat, but still I am being taxed and penalized for withdrawing 60% of what I withdrew, all my own contributions from 2019 and 2020. I must be missing some rule or something on why it is being taxed/penalized? If the default "no taxes or penalties on own contributions" is accurate, then I don't know why TurboTax is calculating tax and penalty. Again, thanks.

Critter-3

May I suggest you delete the entire 1099-R form and enter it again from scratch ... that should fix the error. But if you withdrew only the contributions and no earnings then there should be no tax or penalties applied.

What is the code in box 7?