I’ve made an IRA excess contribution in 2020 and I asked for the removal of that along with the earnings and my IRA Administrator (Fidelity) reversed them in January 2021. Form 1099-R will be available in January 2022 but I know all the calculation. As far as I understand:
1) I don’t need to pay 6% penalty fee because I did the reverse along with the earnings before the 2020 tax due date
2) I need to report the *interest* as gross income in 2020 tax year
3) I need to pay 10% early withdrawal penalty only on the interest because I am younger than 59.5
A couple of questions:
a) Can someone please help if I need to report #3 in 2020 tax year or not?
b) Is form 5329 required?
c) I understand I don’t have to wait for 1099-R then amend 2020 tax year return and that I can do it now. Can someone tell me how to use Turbo Tax for that? I found out a way that I can indicate reversing the excess contribution here* but not clear if this is all what I need to do for #2 and #3 above or I need to do extra steps.
* https://ttlc.intuit.com/community/retirement/discussion/help-with-ira-return-of-excess-contribution-...
