ErnieS0
Expert Alumni

After you file

@AmyC is correct.

  1. There is no early withdrawal penalty on your distribution because it was a “recharacterization,” moving from one type to IRA (Roth) to another (Traditional).
  2. You do not have to amend your 2019 tax return because your “recharacterization” took place in 2020 (even though it involved 2019 taxes).
  3. The 1099-Rs explain exactly what you did to remove the excess contribution penalty. So the IRS will not send any penalties or letters.
  4. You do not have to withdraw the $168 from your Traditional IRA because the money represents earnings from the account, not a contribution. In 2019 your put after tax money into a Roth, but your income was too high for a Roth contribution. As a result, you “recharacterized” your contribution as a non-deductible Traditional IRA contribution (because you made too much for an IRA deduction as well). The $168 is never taxed earnings so it is taxable on your 2020 return. Someday when you withdraw money from the Traditional IRA you will have a mix of never taxed earnings and previously taxed money so part of the distribution will be non-taxable. TurboTax will track your IRA “basis”.  
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