I had excess Roth IRA contribution for 2016. I have removed the contribution prior to filing my tax return. The Net Income Attributable (NIA) was also distributed. I am under 59 1/2. Is the NIA distribution taxable, or can it be considered removal of contributed funds (the Roth IRA has contributions from prior years). If it is taxable, is it reported in 2016 (same year as the excess contribution) or 2017 (year the distribution was made)? If taxable in 2016 how to I report without a 1099-R?

Solved

Is NIA from removal of excess Roth IRA taxable 2016 or 2017?

Forum|Forum|7 years ago
June 4, 2019
1 reply
0 views

I had excess Roth IRA contribution for 2016. I have removed the contribution prior to filing my tax return. The Net Income Attributable (NIA) was also distributed. I am under 59 1/2.

Is the NIA distribution taxable, or can it be considered removal of contributed funds (the Roth IRA has contributions from prior years).
If it is taxable, is it reported in 2016 (same year as the excess contribution) or 2017 (year the distribution was made)?
If taxable in 2016 how to I report without a 1099-R?

TurboTax Deluxe Windows

Best answer by dmertz

The NIA is taxable and subject to a 10% early-distribution penalty. The NIA is taxable on the tax return for the year in which the excess contribution being returned was made. That would be the 2016 tax return if the contribution for 2016 was made in 2016 (code JP on the 2017 Form 1099-R) or on the 2017 tax return if the contribution for 2016 was made in 2017 (code J8 on the 2017 Form 1099-R).

To report a code JP 2017 Form 1099-R on your 2016 tax return, simply enter the Form 1099-R into 2016 TurboTax as if you have already received it:

Box 1 = gross distribution (excess plus NIA)
Box 2a = NIA
Box 7 = code JP

Be sure to also enter the original Roth IRA contribution and indicate in the follow-up that you had the excess returned (do not include the NIA when entering the amount of excess that was returned).

D

dmertzAnswer

Employee

The NIA is taxable and subject to a 10% early-distribution penalty. The NIA is taxable on the tax return for the year in which the excess contribution being returned was made. That would be the 2016 tax return if the contribution for 2016 was made in 2016 (code JP on the 2017 Form 1099-R) or on the 2017 tax return if the contribution for 2016 was made in 2017 (code J8 on the 2017 Form 1099-R).

To report a code JP 2017 Form 1099-R on your 2016 tax return, simply enter the Form 1099-R into 2016 TurboTax as if you have already received it:

Box 1 = gross distribution (excess plus NIA)
Box 2a = NIA
Box 7 = code JP

Be sure to also enter the original Roth IRA contribution and indicate in the follow-up that you had the excess returned (do not include the NIA when entering the amount of excess that was returned).

S

sibandu

How do you handle the reporting if this situation had Federal & State Tax withheld? Would you report those taxes i 2016 Tax Return OR would you report that on 2017 Tax Return?