I need clarification on how to report recharacterized IRA contributions and the removal of excess contributions on my 2024 tax return. Here's a summary of the timeline and the details of my situation:
January 2024: I contributed $7,000 to my Roth IRA.
December 2024: I recharacterized $8,539 from my Roth IRA to a Traditional IRA.
March 2025: The excess contribution amount was determined to be $7,000, with a total earnings/loss of (-$250.06). I will receive a total of $6,749.94 from the Traditional IRA.
2.
(1) I received a 1099-R on Jan 2025 for the recharacterization in 2024 with 'N' in Box 7. This appears to be related to a recharacterized IRA contribution for the year 2024.
Box 1: The total distribution amount. $8,539
Box 7: 'N' – Recharacterized IRA contribution made for 2024, recharacterized in 2024.
(2) I will receive a 1099-R for the excess contribution removal in early 2026. However, I plan to report this on my 2024 tax return.
Here's my question regarding the 1099-R forms:
Box 1: $6,749.94 – Total Distribution (Contribution $8,000 minus the loss)
Box 2a: $0
Box 7: P and 1
(1: Early distribution (except Roth), no known exception & P: Excess contributions plus earnings/excess deferrals (and/or earnings) taxable in 2023)
Check the "IRA/SEP/SIMPLE" Box: I received a distribution from a Traditional IRA.
Which year on Form 1099-R? 2025
My question is:
1. When filing my 2024 tax return, should I report both the 1099-R with 'N' in Box 7 (1) and the 1099-R with 'P' and '1' in Box 7 (2) together, or should I only report the 1099-R with 'P' and '1' in Box 7 (2) for the excess contribution removal?
I want to ensure that I’m correctly reporting both the recharacterization and the excess contribution removal.
2. I opened a Traditional IRA for the purpose of recharacterizing my Roth IRA contribution, so the Traditional IRA was empty at first. I requested the return of the excess contribution of $7,000 from the Traditional IRA, but since there was a loss, I only received $6,749.94. I’ve been told that the remaining amount, the earnings from the recharacterization process, is not part of the return and is not being refunded.
The remaining balance in the Traditional IRA is part of the recharacterized amount, and since it is not an excess contribution, there is no need for a return. It stays in the Traditional IRA. This part is not subject to a return, and I believe this is the correct understanding, but I’m not completely sure.
Any guidance on the correct approach would be greatly appreciated.
Thank you!
