Withdraw Excess Roth Contributions at a Loss

Forum|Forum|6 years ago
April 11, 2020
1 reply
0 views

I realized that in 2019, I contributed too much to my Roth IRA. The value of the IRA has declined since the contribution, so when I withdrew in 2020, I took out the excess contribution minus the associated losses.

I entered into TurboTax that I am planning to fully withdraw the entirety of the excess contribution prior to the tax deadline so they do not add the penalty. However, given that I won't receive a 1099-R until 2021 (due to withdrawing in 2020), I'm unsure of what to enter in the "income" section?

Should I be entering a "dummy" 1099-R so I do not have to file an amended return later on? If so, given that I am showing a loss, what do I enter in box 1 (excess contribution minus the losses, or just the excess contribution?) and box 2a (can I enter a negative number for losses or leave it at $0)? What codes should I use for box 7?

TurboTax Premier Online

Best answer by DavidS127

No, don't enter anything in your 2019 taxes if you withdrew the excess Roth before the due date of your 2019 tax return. And, because you have a loss for the period of time before the excess contribution was withdrawn, you won't need to amend your 2019 tax return when you get the 2020 1099-R because there are no earnings to report.

That 2020 1099-R will report the excess contribution minus the loss in box 1, a zero in box 2a and a code JP in box 7. The JP code tells that IRS that it was the withdrawal of an excess contribution from a Roth by the due date, and the zero in box 2a tells the IRS there is no income to report.