Two 1099-Rs: 2023 and 2024 IRA excess contributions

Forum|Forum|1 year ago
February 3, 2025
3 replies
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Hello,

In 2023 I contributed $6,500 to my Roth IRA. I ended up surpassing the income limit and had to withdraw it as an excess contribution which I did in February 2024 while doing my taxes. I of course did not receive a 1099-R for this in time for filing. If I look back at my 2023 return, I see $6,500 in the excess contribution section and $390 (6%) as "additional tax".

In 2024 the same thing happened with my $7,000. I contributed in January but realized by October I would have to withdraw it and did so.

Now that I am doing my taxes for 2024, Vanguard sent me two 1099-Rs in the same file for both of these events. Since both excess contributions were removed in 2024 (even though they pertained to different contribution years), do I import both 1099-Rs into this year's taxes? Or only the one that corresponds to the 2024 contribution/withdrawal?

Turbotax tells me I also have to amend my 2023 taxes. I assume when I do that, they want me to enter only the

1099-R that corresponds to that year's removal. So is it correct to import both this year?

Any help is appreciated. Thank you.

RobertB4444

You would need to amend the 2023 return in order to remove that penalty since you withdrew the excess contribution before the due date of the return. Then you just put in the 2 for this year and you should be good to go.

[Edited 02/05/2025 07:11 AM PST]

@husky23

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dmertz

Employee

"If I look back at my 2023 return, I see $6,500 in the excess contribution section and $390 (6%) as "additional tax"."

You must amend your 2023 to remove that penalty and enter the code JP 2024 Form 1099-R because the amount in box 2a of that form is taxable on your 2023 tax return, not on your 2024 tax return. When going back through the Roth IRA contribution, when TurboTax asks if you had the excess contribution returned before the due date of your 2023 tax return, answer that you had $6,500 of contribution returned.

husky23Author

Thanks. Another issue I am running into is when I import the 1099-Rs, the next question is if I took disaster distributin (no), then it asks for the value of the IRA as of Dec 31, and finally it says "Let's see if we can reduce your early withdrawal penalty". The next screen says "Identify the plan" and my only options are qualified retirement plan, nonqualified annuity, modified endownment contract. Roth IRAs are none of these but it doesn't let me continue unless I choose one..

If I choose qualified retirement plan, the next screen has the "Corrective distribution" field I believe I should use but the description of this screen clearly says "If you used the money you took out of a retirement account (other than an IRA)..." how else can I input the corrective amount if not through here?

dmertz

Employee

For a distribution from a Roth IRA, make sure that you've included the code J from box 7 of the payer's Form 1099-R in box 7 of TurboTax's 1099-R form.

DanaB27

1. Yes, you can put $0 as the contribution for 2024 or enter your contribution and then tell TurboTax on the penalty screen at the end of the IRA contribution interview that you removed it by the due date. Both methods work.

No, you will not enter the $6,500 "Enter Excess Contributions for Prior Years". You removed the 2023 excess plus earnings before the due date, therefore, you no longer have an excess contribution.

2. You don't apply any excess to 2024 since you removed the 2023 excess plus earnings before the due date.

@husky23

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husky23Author

Thank you (and everyone so far). This makes sense.

So at this point my only open question is, when I upload the 1099-Rs and start going through the questions, ("Let's see if we can reduce your early withdrawal penalty..") I am getting the "Identify the plan" screen where I MUST choose something. I can only make it work if I choose "qualified plan" and then add the corrective distribution amount on the next screen. I just want to make sure doing this is correct even though Roth IRAs are not qualified plans?

mglauner

It might be prudent to delete your imported 1099-R's and enter them manually to go down the correct path in TurboTax.

You are correct that a Roth IRA is NOT a qualified plan. A qualified plan means that contributions are tax deferred. Contributions to a Roth IRA are not tax-deferred, but because they are not, the withdrawals are not taxable.

The Code Q on your 1099-R designates a Qualified Roth Distribution. Box 2a should be blank, and Box 2b checked. In the follow-up questions, indicate whether you rolled over the earnings or not. You should not get the question you mentioned in either case.

Here's more detailed info on Roth IRA Withdrawals.

@husky23