You are correct in your understanding. The Code J implies an Early distribution from a Roth with no known exception which is why the penalty is being assessed. But since this is a timely withdrawal of earnings on an excess contribution to Roth, you can follow these steps to eliminate the penalty.
- Go to Federal and Income in TurboTax online
- Find IRA, 401(k) and pension plan withdrawals - click Add/Edit then click Done
- Click Continue to get to a screen "Let's see if we can lower your tax bill" Click Continue
- Hit the pencil icon to edit who may qualify for a penalty exception
- Select IRA, then Continue
- On "These situations may lower your tax bill", scroll down to "Corrective distributions made before the due date of return" then enter the $ amount of the distribution of earnings reported on your 1099-R
Once you take these steps, this will eliminate the penalty on the earnings distribution.
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