fehrdl
Returning Member

Investors & landlords

I don't think that is correct. At least Publication 590-A reads very differently. I'm very confident that the removed earnings are considered income. My 1099-R indicates that they are. I'm just unsure if the additional 10% penalty can be avoided since it wasn't a true "Excess Contribution."

 

Form 8606 isn't appearing in my "Forms in My Return" list. When I opened it directly, nothing is populated. I believe this is because my 1099-R classified the withdrawal as '8 - Excess contributions plus earnings/excess deferrals (and/or earnings)' which is an exception to Form 8606. All I see is the 1099-R Summary and Form 5329 which calculates the additional 10% early withdrawal penalty.

 

Publication 590-A 


How to treat withdrawn interest or other income.

 You must include in your gross income the interest or other income that was earned on the excess contribution. Report it on your return for the year in which the excess contribution was made. Your withdrawal of interest or other income may be subject to an additional 10% tax on early distributions discussed in Pub. 590-B.

Beginning on or after December 29, 2022, the 10% additional tax will not apply to your withdrawal of interest or other income, if withdrawn on or before the due date (including extensions) of the income tax return. See Pub. 590-B for more information.