I usually wait until April of the current year to contribute to my Roth. I then contributed the max only to find out that I over contributed by $780 due to a late payment by one of my clients. So reading in this forum, it stated that if I removed the excess prior to the filing dateline for 2019 tax returns, it would count as 'amount not contributed'. I then went into my online account, and removed the $780. My account shows the $780 removed as a 'subtraction' so I was happy the account was now correct. This year, I received a 1099R with an early distribution code. I called my plan administrator and asked why the 1099, and was informed that I had withdrawn the $780 as a distribution, therefore, the early distribution. I was also informed that I needed to correct the over contribution due to the fact that the over contribution was still there. I asked them why they could not correct the error, since it would just be paperwork to them.
I was told to fill out a form, requesting the amount to be withdrawn, and then they would ascertain how much to add to the excess $780 dollars, because the account would have to add the profits for the account. I use my Roth account and I invest as much of it in the stock market. My question to you out there is, why, if I took the excess out in 7 days, and only saw a $189 increase from the time I contributed, to the time I withdrew, do I have to add profits more the the $189 for that week? And , would you recommend, that I just go into an IRS office,(when they open again),, and talk to an IRS agent.. tnx
