I am under 59 1/2. In 2020, I made $6k excess ROTH IRA contribution due to income over the limit. Back then I didn't enter the contribution into TurboTax, and didn't know the problem. The account balance at the end of 2020 is $6208. For 2021, I made another $6k excess ROTH contribution. I am working on my 2021 taxes now. The account balance is now $12,311. What should I do to fix both years' excess contributions? My plan is:
Step #1: Withdraw both years' excess contributions plus earnings ($12,311) from account.
Step #2: Amend 2020 return to report the excess contribution, and let TurboTax calculate the 6% excess contribution penalty ($360), and pay. Alternatively, I can print and file 2020 Form 5329 by itself, and pay the 6% penalty without amending.
Step #3: In 2021 return, report excess contribution, also answer yes to prior year excess contribution. But mention I had withdrew excess contribution before tax due date. So for 2021, no more penalty.
Step #4: Also in 2021 return, create a 1099-R form with code "JP" in box 7. This 1099-R should have ($12,311) in box 1 "gross distribution", and $311 in box 2a "Taxable amount".
Step #5: When I receive a 2022 1099-R form in early 2023 with code JP in box 7 about the excess distribution withdrawal, I can ignore the form because I already entered it in Step#4.
Did I miss anything? Thank you.
