Removing Excess Traditional IRA contributions from 2023

Forum|Forum|1 year ago
August 6, 2024
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Hello, I made an excess contribution in my Traditional IRA for the year 2023. I have removed these excess contributions in July 2024 and haven't filed my TY 2023 return (applied for a 6-month extension). Already checked with the IRA financial institution, the New Form 1099-R(reflecting this removal transaction) will be generated until early 2025.

My questions are:

1. To avoid amended returns in the future, can I directly adjust the IRA contribution amount in my TY2023 return without the Form 1099-R? (Haven't filed TY 2023, and adjust 2023 IRA excess contribution)

2. How do I enter this transaction into the TurboTax desktop version?

3. Will I need to pay a 6% additional tax or a 10% early withdrawal tax?

4. Will I need to fill out Form 5329? How to reflect the removal transactions in Form 5329 to avoid 6% additional tax?

Thank you in advance!

fanfare

Employee

You requested an extension.

return of excess contribution:

before tax filing date including extension: positive earnings allocable to the excess are included in income on 1040 Line 4b for the year of the contribution. negative earnings are ignored; in any case, for purposes of basis, consider the original contributed amount as returned.

positive earnings removed are no longer penalized 10% if you are under age 59 1/2. (eliminated in 2023)

@fiona5