dmertz
Level 15

Retirement tax questions

The code J8 2018 Form 1099-R is reporting the return of your 2018 contribution, but the numbers don't make sense.  Box 1 should be the amount you contributed for 2018 and had returned to you ($6,500) plus the $72.78 of earnings shown in box 2a.  The $72.78 is subject to tax and, if you were under age 59½ at the time of the distribution in December 2018, to a 10%, $7 early-distribution penalty, reported in Part I of 2018 Form 5329.  (If you were over age 59½, you'll need to claim an Other reason exception to the 10% early-distribution penalty on the $72.78.)

It appears that you have not yet corrected the excess contribution made for 2017.  Yes, if not already reported with your 2017 tax return, you need to amend your 2017 tax return to include Form 5329 to report the excess $6,500 contribution and pay the 6%, $390 penalty for 2017.  In 2018 TurboTax, in the traditional IRA contribution section you'll need to indicate that you have a $6,500 excess contribution carried in from 2017.  2018 TurboTax will prepare Part IV of Form 5329 to calculate the $390 penalty for 2018.

To avoid having an excess contribution penalty again for 2019 you must make a regular distribution from your Roth IRA (not a return of excess contribution before the due date of your tax return) of exactly the amount of the excess contribution made for 2017, $6,500.  This will be included in Part IV of your 2019 Form 5329 to eliminate the excess.

Assuming that you correct the 2017 excess contribution in 2019, in all you will have paid $780 in excess contribution penalties ($390 for 2017 and $390 for 2018).