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Retirement tax questions
Yes, you would be subject to an additional fee for not reporting the excess contribution in the tax year that it happened, and you will need to submit the state return by mail next year.
If you withdraw the excess contribution in 2020 and you have not yet filed your tax return, you can report the withdrawal so you are not charged the 6% penalty for 2020.
To report the withdrawal you create a substitute 1099-R
- You would enter the 1099-R with the total distribution in box 1 (the contribution plus the earnings),
- The earnings in box 2a,
- Enter code "P" in box 7 (Top)
- Enter code "J" in box 7 (Bottom).
- On the "Which year" screen say that this is a 1099-R.
March 29, 2021
2:19 PM