What the other expert explained is what's called an "absorption" where you if you put less this year, it'll absorb your excess up to your maximum contribution rate this year from last year excess. But if any excess remains after the absorption for the year and your maximum, you will still be charged a 6% penalty on the excess for next year, a lower amount do to the absorption. Here's some information about reporting requirements from a previous answer, answered last year; but same concept. A code of P and J might apply to this withdrawal on your 1099-R.
It depends, if no known exception applies, you will be taxed 10% early withdrawal. Here's information from the IRS website about additional taxes on contributions and exceptions to the 10% tax. If you withdrew in 2023, you will receive a form in early 2024, for 2023 tax return.
Just report what you've done for your 2022 year. Also, with this withdrawal you have 2 options:
- You can wait until you receive the 1099-R 2023 in 2024 and amend your 2022 return or
- You can report it now in your 2022 return and ignore the 1099-R when it comes unless there is Box 4 Federal Tax withholding and/or Box 14 State withholding. Then you must enter the 2023 1099-R into the 2023 tax return since the withholding is reported in the year that the tax was withheld. The 2023 code P will not do anything in 2022 tax return but the withholding will be applied to 2023.
@coolcarn1sam
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