MindyB
Expert Alumni

Get your taxes done using TurboTax

Please see below for the answers to your questions:

 

  1. Yes, you do need to report the gain.  The tax you had withheld was just a prepayment, similar to the federal tax withheld on your paycheck.
  2. Yes, this is the correct method. You'll first input the 1099-R you actually received, based on how it was reported to you (the 6.5k conversion in February 24).  Next, you'll create one mock 1099-R to report the withdrawal on the accidental Roth contribution (NOT the rollover done in 2025- that will be properly reported in 2025). In box 1, report the total of the earnings and contribution, $10k, and in Box 2, the earnings, $3k. When you enter this in TurboTax, be sure to indicate the year on the form is 2025. 
  3. No, do not report that you contributed to a Roth IRA in 2024.  You removed the contribution and are paying tax on the earning separately, in step 2 above.

View solution in original post