Question

Roth IRA excess contributions made in 2020 and 2021 - withdrew, but how to report?

Forum|Forum|5 years ago
March 25, 2021
1 reply
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Hello,

I made excess Roth IRA contributions in Aug 2020 of $6000 for 2020 and in Feb 2021 of $6000 for 2021. These were the only two contributions ever made to this Roth IRA. I realized both were in excess and have withdrawn all monies (contributions plus the earnings). I have not filed my 2020 taxes yet. The total distribution is $13,622, so the earnings are $3622, which I know I am responsible for paying taxes on and the 10% early withdrawal penalty.

Since the contributions are for two different calendar/tax years, how/what do I report for the earnings? Is it possible to report all of it on my 2020 return and pay all taxes and penalty now, or do I need to split it up between two different tax years? Since I would not receive a 1099 of the distribution until 2022, I believe I complete a substitute 1099?

Thank you

M

MinhT1

You do not need to complete a substitute 1099-R.

As the excess contributions are for 2020 and 2021, you should report half of the excess in each year. As the excess contributions are withdrawn before the due date of the return for 2020 and during 2021 for 2021, they are considered as not having been contributed.

As for the earnings, they are taxable for half the amount in each of the years 2020 and 2021 and are subject to the 10% penalty.

When you receive the 1099-R in 2022, no further action is needed.

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M

maddy082002Author

Hello,

Sorry, I'm not quite understanding.

Can you tell me specifically where I report the earnings in my 2020 tax return if I do not have a 1099 for them and I am not creating a substitute one either?

The total distribution for both years is $13,952.83. The excess contributions are $6000 for 2020 and $6000 for 2021. Combined earnings is $1952.83. When split in half, earnings are $976.50 for each year.

What form/box/section/amount do I enter for this in my 2020 return?

Thank you

T

ThomasM125

To report the earnings on the excess contribution, you should enter a Substitute form 1099-R and enter it on your 2020 return to report the 2020 earnings. You will see an option for this when you see the screen Tell us Which 1099-R You Have.

Enter in box 1 the distribution amount. In box 2 enter the earnings. Enter code "P and J" in box 7. Work through the questions in TurboTax after you entered the 1099-R until you see a question regarding why you made the distribution, to which you will respond it was a return of an excess contribution.

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